Abstract
ABSTRACT Utilizing the TVP-VAR-based connectedness approach, this paper investigates the spillover effect of the US and China’s categorical EPUs on RMB internationalisation. The results show that the EPUs have a negative disturbance on RMB internationalisation which has been strengthened since the RMB exchange rate reform in 2015. Specifically, the RMB internationalisation is vulnerable to China’s foreign exchange policy and monetary policy uncertainties. Furthermore, since the launch of the series of ‘America First’ policies and the escalating trade conflicts with China, the spillover effect of the uncertainties relating to US trade policy and China’s trade policy has increased significantly.
Published Version
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