An Empirical Study on the Impact of Trade War on Both the US and Chinese Economies, Based on the Value-at-risk Approach

Abstract

The trade war between the US and China has led to global instability, this makes studying this topic very important and sensitive. This study aims to show the impact of the trade war on both the United States and China, by studying both US and Chinese companies before and after the trade war.Although the trade war is still ongoing and has not ended, but it is long enough to judge its impact on the two countries. In this study, the value at risk was used as a tool to compare the size of the risks to both the US and Chinese portfolios before and after the trade war, the results showed that the VaR of the US and Chinese portfolio after the trade war was greater than the VaR before the trade war, This means that the two countries were affected by the trade war.However, the results also showed that this change in the VaR of the US portfolio was greater than the change in the VaR of the Chinese portfolio, this means that the US portfolio has been more affected by the trade war than its Chinese counterpart.

Risk spillovers connectedness between the US Fintech industry VaR, behavioral biases and macroeconomic instability factors: COVID-19 implications

“…Accordingly, the increase of the connectedness index can be explained by the rise of trade tensions between the USA and China that was associated with various uncertainties and significant perturbations affecting the risk of the US stock market. Similar results are reported by Djebbouri et al . (2021) who used the VaR measure to compare the risk size between the USA and China before and after the trade war.…”