United States Economic Policy Research Articles

U.S. Economic Policy Towards China under the Biden Administration

Since the inception of the open-door policy in 1978, China has progressively become more integrated into the global economy through trade, foreign direct investment, and, more recently, outward direct investment. This economic integration has gained momentum with initiatives like the ‘Go Global’ strategy, China’s entry into the World Trade Organization (WTO) in 2001, and the launch of the Belt and Road Initiative in 2013. China’s economic ascent, coupled with its increasing political influence and military power, prompted the United States (US) to initiate a strategy of rebalancing in the Asia Pacific region, starting with the Bush administration and continuing through the Obama, Trump, and Biden administrations. During the Trump administration, this rebalancing strategy was supported by decoupling strategy, ultimately leading to a trade war with China. Despite its intention to avoid the initiation of a new Cold War and to adopt a more moderate stance towards China, the US-China trade war has evolved further into a tech war under the Biden administration. Given this context, this article aims to outline the primary characteristics of the US economic policy towards China during the Biden administration, comparing it to the Trump administration and assessing its impact on both nations. The central argument of this article is that the primary characteristics of the US economic policy towards China under Biden administration are rebalancing and decoupling, carried over from the policies of the preceding Trump administration, and there are clear signs that these characteristics are deepening. Furthermore, the article demonstrates that the extensive decoupling measures enacted by the US have proven effective in diminishing China’s role in global industrial and supply chains, particularly in industries related to semiconductors and chipmaking equipment.

The Impact of United States Economic Policy Uncertainty on Financial Stability in BRICS Economies

The Impact of United States Economic Policy Uncertainty on Financial Stability in BRICS Economies

Global financial stress index and long-term volatility forecast for international stock markets

In this study, we examine the long-term predictive role of the global financial stress index (GFSI) on equity market volatility and provide a comprehensive analysis using GFSI for the realized volatilities of 21 international stock indices. By focusing on the out-of-sample analysis, we show that GFSI has strong predictive information in forecasting the long-term realized volatilities for most of these equity indices, and it performs better than the Chicago Board Options Exchange volatility index (VIX), the United States economic policy uncertainty (USEPU), global economic policy uncertainty (GEPU), and geopolitical risk (GPR). In terms of the predictive performance during the COVID-19 pandemic, we further show the significantly effective role of GFSI for the long-term realized volatilities of equity markets. In dealing with the high-level global financial stress, our study helps policymakers from many countries to prevent large market fluctuations and decrease economic damage, and facilitate market participants to form better risk-aversion investment strategies.

Asymmetric effects of geopolitical risks and uncertainties on green bond markets

This paper examines the asymmetric effects of the United States Economic Policy Uncertainty (USEPU), Geopolitical Threats (GPRT), Geopolitical Acts (GPRA), and the West Texas Intermediate (WTI) crude oil on Green Bond returns. Our study analyses USEPU, GPRT, GPRA, WTI, and Green Bond monthly data from September 2012 to August 2022. By applying the Nonlinear Autoregressive Distributed Lags (NARDL) model, our empirical evidence shows that in the short run, the return on green bonds is negatively affected by an increase in USEPU and GPRA positively affected by an increase in GPRT and WTI. In the long run, the return on green bonds is negatively affected by an increase in USEPU, GPRA, and GPRT but positively affected by WTI. Considering the climate crisis, looking at these findings in the context of green bonds is essential to entice green investments. Policymakers should use our results for a policy design to mitigate green bond market volatility caused by external uncertainties and risks. Furthermore, we conclude that uncertainties should be considered when investing in green bonds and managing investment portfolios.

Causal effect of pandemic COVID-19, gold and oil prices on United States economic policy uncertainty: Evidence from ARDL method

The United States is the most significant economic power in the world. Therefore changes in economic indicators or economic policy of the United States will affect the whole world economy like the global financial crisis 2007-08. The first innovative study examines the effect of United States Coronavirus (COVID-19), oil, and gold prices on United States economic policy uncertainty. Autoregressive Distributed Lag Model(ARDL) is employed to get the long and short-run co-integration results. The outcome shows that (USCOVID_19 and OIL) significantly co-integrated in both the short and long run with United State Economic Policy of Uncertainty(USEPU) at a significant level. USCOVID-19 is positively short and long-run co-integrated, while oil is negatively short and long-run co-integrated with the economic uncertainty level of the USEPU. Only one variable of gold has no short and long-run co-integrated with USEPU.

Economic policy uncertainty and industry portfolio returns in the United States

ABSTRACT This paper examines whether returns on 49 different industry portfolios in the United States (US) expose significantly to the US economic policy uncertainty (EPU) even after controlling for the market and firm-specific risk factors. We find that the US EPU can load significantly against the returns of 15 industry portfolios which include stocks from heavy manufacturing and export dependent industries. However, further asset pricing tests show that the US EPU cannot improve the ability of a benchmark model to capture average industry returns. Additionally, the impact of EPU is time-dependent and significant only during specific periods which are different for each industry. Using a portfolio analysis, we also test whether EPU can forecast future returns. Results imply that the return-EPU relationship is almost flat.

Neoliberalism, inequality, and violence

There was a drastic shift in the United States economic policy that began in the 1970s and 1980s. These policies can be ideologically categorized as neoliberal policies.1 The purpose of this study is to examine the relationship between neoliberal policies and social tension through a mediating variable of economic inequality. The goal is to explore a potential connection between neoliberal policies and social tension from the 1970s and 1980s to the present. This study used a methodology that entailed creating a timeline of neoliberal policy implementation, then comparing it to historical data on inequality. Inequality data was collected from the Gini coefficient and index which are a statistical measurement of income and wealth inequality. Gini coefficient and index data was then compared to violent crime rates and racial hate crime rates in a correlational analysis. Violent crime rates and racial hate crime rates were used as an indicator for the variable of social tension. Data availability on racial violence was a major limiting factor to the original goal of the study. The analysis indicated that there is a temporal correlation between neoliberal policy implementation and growth in inequality, but a more complex relationship between inequality and social tension exists than originally hypothesized. There are additional extraneous variables influencing social tension that were not present in this analysis. Further examination of influential factors that contribute to - or reduce - social tension should be explored.

International Energy Agency and U.S. Economic Policy

The article is devoted to the activities of International Energy Agency (IEA) on the background of the United States economic policy. The IEA was founded in 1974 to develop a collective response of Western countries to major disruptions in the supply of oil. The key purpose of International Energy Agency was to coordinate energy policy of developed countries and to limit activities of petroleum exporting countries. Some reasons for international energy markets regulations are being discussed in the article. For the last decades International Energy Agency is at the center of global dialogue on energy, providing authoritative analysis, data, policy recommendations, and real-world solutions to help countries provide secure and sustainable energy resources. In spite of this fact there are some serious contradictions between member countries. While oil security remains a key aspect of its work, the IEA has evolved and expanded significantly since its foundation. The IEA recommends policies that enhance the reliability, affordability and sustainability of energy. It examines the full spectrum issues including renewables, oil, gas and coal supply and demand, energy efficiency, clean energy technologies, electricity systems and markets, access to energy, demand-side management, and much more. Some aspects of President Biden administration energy policy are being discussed in the article. The article covers major trends of structural changes in US energy consumption during 2010 – 2020. Statistical analysis shows that oil and natural gas industries have very insignificant effects on US gross domestic product. Political sanctions against Russia continue to impact global energy demand. Current situation on the global oil market is being analyzed.

Threshold Cointegration Approach for Assessing the Impact of US Economic Policy Uncertainty on Monetary Policy Decision of African Countries

This study uses threshold cointegration technique to ascertain the relationship between United States (US) economic policy uncertainty (EPU) and monetary policy rate (MPR) of each of the four African countries, namely Egypt, Ghana, Namibia and South Africa using monthly data from March 1998 to April 2020. The impact of US EPU on MPR of each country is assessed by examining the linear cointegration, asymmetric cointegration and causal relationships in the frequency domain between the US EPU and MPR of each African country. The findings provide evidence of long-run threshold cointegration and the adjustment mechanisms towards long-run equilibrium are asymmetric in the short run for the MPR models for Ghana, Namibia and South Africa in the M-TAR specification except for Egypt’s MPR model which does not provide evidence of asymmetric adjustment towards the equilibrium position. The bivariate analysis performed in the spectral frequency domain suggests unidirectional causality between US EPU and MPR of each country and that, the US EPU influences the MPR of each country in the long run. The findings provide important guidelines to monetary policy reviewers to take policy stance that would stimulate economic growth amid US policy uncertainties.

How does economic policy uncertainty connect with the dynamic spillovers between precious metals and bitcoin markets?

In this paper, we examine the role of United States Economic Policy Uncertainty (US EPU) on the connectedness between bitcoin and precious metals using both dynamic spillover and nonparametric causality-in-quantiles approaches. First, using the time varying parameter vector autoregressions spillover test, we found that there is strong connectedness between the Bitcoin and precious metals markets. Second, BDS test shows that nonlinearity is a very crucial factor to be put into consideration when examining the causal effect of economic policy uncertainty on the interactions between Bitcoin and precious metals markets. Third, the non-parametric causality-in-quantile test confirms that the connectedness between the markets and economic policy uncertainty is stronger mostly around the median and higher quantiles. Thus, the connection between bitcoin and precious metals might not act as a hedge or safe haven against economic policy uncertainties especially around these periods. Our findings have pertinent policy implications for investors and markets analysts.

Do COVID-19 and crude oil prices drive the US economic policy uncertainty?

This paper investigates the effect of COVID-19 and crude oil prices on the United States (US) economic policy uncertainty (EPU), with a focus on the pre-pandemic phase of the sanitary crisis. Using daily data for the period January 21 – March 13, 2020, our Autoregressive Distributed Lag (ARDL) model shows that the new infection cases reported at global level, and the fatality ratio, have no significant effect on the US EPU during the first phase of the crisis, whereas the oil price negative dynamics leads to increased uncertainty. However, analysing the situation outside China, we discover that both new case announcements and the COVID-19 associated death ratio have a positive influence on the US EPU. Keywords: coronavirus; economic policy uncertainty; COVID-19; EPU; oil prices

Unveiling the Effect of Mean and Volatility Spillover between the United States Economic Policy Uncertainty and WTI Crude Oil Price

Grounded in the Granger causality test, vector autoregression (VAR) model, and BEKK-GARCH model, our current study aims to examine the effect of mean and volatility spillover between the United States (US) economic policy uncertainty (EPU) and West Texas Intermediate (WTI) crude oil price. Using the US EPU monthly index and WTI spot price data from 1996 to 2019, we revealed that there is a one-way Granger causality link between the US EPU and spot price of WTI crude oil. The VAR model not only illustrated that there is a mean spillover effect between WTI oil price and US EPU, but they will also be affected by its memory, as well as the other’s past. At the same time, it also pointed out that this correlation has positive and negative directions. The BEKK-GARCH model test yielded similar conclusions to the VAR model and, importantly, proved a two-way volatility spillover effect between the US EPU and WTI spot price fluctuations. In conclusion, US economic policy has a substantial influence on the variation of global crude oil prices, as an essential strategic reserve resource and will also influence the government’s economic policy formulation. Understanding the association between WTI crude oil price and policy uncertainty not only helps investors to manage assets allocations and mitigate losses but also guides US policymakers to adjust the energy structure for economic sustainability.

Time-varying co-movements between energy market and global financial markets: Implication for portfolio diversification and hedging strategies

This study explores the time patterns of volatility spillovers between energy market and stock prices of seven major global financial markets including clean energy, energy, information technology corporations, equity markets and United States economic policy index over the period vary from December 28, 2000 to December 31, 2018. We employ a time domain connectedness measures of Diebold and Yilmaz (DY, 2009, 2012 and 2014) to examine spillover mechanism of volatility shocks across future markets. Optimal weights and hedge ratios are calculated for portfolio diversification and risk management. The main findings of the study conclude that oil shocks are exogenous and contribution of oil market volatility to global financial markets is insignificant. The returns of World Stock Index and World Energy Index are major transmitters of volatility to clean energy market. Moreover, the impact of energy market become strong in global financial market when data is divided into pre, during and post financial crisis periods. Finally, the hedge ratios are volatile over time and their maximum value is observed during the financial crisis period of 2008–09. The optimal portfolio between energy and stock prices are heavily weighted to the stock markets.

Chile y los Estados Unidos : distanciamientos y aproximaciones

This paper reiterates the thesis pointed out by other analysts that the bilateral relationship between Chile and the United States has had more moments of distance than of rapprochement. This hypothesis is verified by a historical description of the ties between the two nations since the 19th century. However, we argue that a new type of relationship is being formed based on a shared international realism and that a more constructive approach is being implemented in the current Bush administration, especially in the context of the Americas Initiative, a policy that results from a thorough review of the United States economic policy towards Latin America.

A Comment on United States Economic Policy and the "Dollar Gap" of the 1920's

N his recent article on international economic disequilibrium in the ig20's,l M. E. Falkus suggests that, since American agriculture and industry had a great competitive edge over the rest of the world, American commercial policies were largely irrelevant to the trading situation. Thus he excuses to some extent the illiberal, restrictive, and irresponsible international economic policies pursued by the United States during this period, in questioning their effectiveness and by denying the potential effectiveness of alternative policies. He also implies that, since in his opinion an effective adjustment in the i920's was probably impossible, the world crisis of I 929 was inevitable-although it might, possibly, have been avoided if the deficit nations had adopted, in the i920's, some of the highly restrictive policies which wrecked world trade in the I 930's.2 The purpose of this comment is to point out that these and other implications drawn by Mr Falkus do not necessarily follow from the evidence he presents. In concentrating mainly on the tariff Mr Falkus is to some extent avoiding the basic issues since there does not appear to be any serious suggestion, by a reputable contemporary commentator or a historian, that changes in tariff policy, in isolation, and without other adjustments, could have prevented international economic imbalances during the I 920'S.3 Quite clearly the tariff is only one factor which must be considered in connection with other, probably more important, influences affecting relative price structures and the international flow of goods, services, and capital. It is important to note that some of these influences were probably of basic significance in determining the effectiveness of the tariff which may, for example, have varied in accordance with the value of the dollar. While the tariff may have been ineffective at the exchange rates which actually prevailed, it might, conceivably, have been much more significant if the United States dollar had been allowed to appreciate.

A Comment on United States Economic Policy and the "Dollar Gap" of the 1920's

A Comment on United States Economic Policy and the "Dollar Gap" of the 1920's

United States Economic Policy and the "Dollar Gap" of the 1920's

PRINCIPAL weakness of the international economy during the I 920's was the persistent imbalance in international payments. Numerous countries in central and eastern Europe, and among non-European primary producers, had serious merchandise trade deficits which were not compensated for (and were often aggravated) by current invisible transactions. The United States was by far the most important of the surplus nations, both on trade and on total current account. It is well known that the current account deficits were sustained only by the continuing flow of international investment, from the United States above all, and to a lesser extent from Britain, France, and a few other countries. This flow added to the interest debts of borrowing nations and was not accompanied by a sufficient expansion of their exports; it enabled delay in adjustinginternational accounts but probably made the adjustment, when it came, more drastic. Disequilibrium was the product of many forces, some rooted in changes in the international economy that had occurred during, and even before, the war. Such changes included the relative over-supply of certain primary products, especially foodstuffs, and of some of the traditional industrial goods; the imposition of huge reparations and war debt obligations at the end of the war; and the creation of new national barriers with concomitant hindrances to international trade and specialization. These and other factors placed a severe strain on the economies of many countries, some of which had in any case suffered from the war and its disturbed aftermath. The result was a gap between the current account incomes and expenditures of numerous countries, a gap which was rarely closed, and was frequently enhanced by the high level of borrowing by debtor nations. Given the structural problems of the international economy after the First World War and the existence of the huge volume of international debt, was any solution to the problem of disequilibrium in international payments possible? Economic historians have sometimes argued that policies pursued during the I920's, especially monetary policy and measures associated with economic nationalism such as trade restrictions, played an important part in retarding the growth of world trade and in perpetuating the imbalance in the world's accounts.2 The United States, the world's major creditor as well as the nation

United States Economic Policy and the "Dollar Gap" of the 1920's

United States Economic Policy and the "Dollar Gap" of the 1920's

Some Aspects of Tariff Protection in Canada

PRESCRIPTIONS ination of present economic conditions and of past policies. The former indicate future possibilities and the latter traditional attitudes. On these bases we can decide what is possible and hazard a guess as to what may be thought desirable. Decisions about the structure and level of the Canadian tariff have been based on conflicting considerations. On the one hand we have wanted to reproduce in Canada the manufacturing industries of advanced Western nations, notably that of the United States. On the other we have wished to benefit from as high a level of international trade as possible. The first aim required a high tariff and the second a low one. The actual course of policy wavered between high and low tariffs, the phase depending on the changing climate of opinion and on changing international circumstances especially changes in the course of United States economic policy and in the stages of the trade cycle. The grounds for wanting a high level of international trade are clear enough in a country so abundantly endowed with certain natural resources as Canada. The gain to be obtained from exporting raw materials and manufactures based on raw materials and from importing other goods in exchange has been so obvious throughout our history as to have required particular ingenuity from those inclined to argue the benefits of protection on economic grounds. The grounds for wanting a well developed secondary manufacturing industry have been as much political as economic. Secondary manufacturing first developed in Europe when its national incomes were growing particularly rapidly and when their relative power was greatest. Manufacturing, growth, wealth and power, associated together in the public mind in Canada as elsewhere, were thought to be causally related and gave support to policies intended to stimulate manufacturing in Canada. The

The Changed Economic Position of Western Europe: Some Implications for United States Policy and International Organization

By the end of the 1950's Western Europe reached an economic position so different from that of a decade before that major new questions arose about the area's place in the world economy. It follows that the assumptions of United States economic policy toward Europe need to be re-examined in the new circumstances. Of central importance are questions about the degree and type of economic regionalism that the countries of Western Europe will pursue in the future. Their experience in the last decade and a half has provided unprecedented evidence of the compatibility of regionalism and globalism in some circumstances. As a result we are past the point at which the two tendencies can be thought of as necessarily sharply antithetical. American policy, which all along has sought to encourage a dual approach, has now to find ways of striking a new balance between regionalism and globalism, since the new circumstances have removed some of the important assumptions of the old policy.