Monetary Policy and the Time-Varying Spatial Effects of Bilateral Trade: Evidence from China-ASEAN-5 Countries

This paper examines the China–ASEAN (Association of Southeast Asian Nations)-5 bilateral trade balances by using a time-space simultaneous gravity model with a panel smooth transition regression specification. This model can investigate both internal and external bilateral trade. The empirical resul...

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Bibliographic Details
Published in:Applied spatial analysis and policy 2017-03, Vol.10 (1), p.103-120
Main Authors: Wu, Po-Chin, Liu, Shiao-Yen
Format: Article
Language:English
Subjects:
Human Geography
Interest rates
International trade
Landscape/Regional and Urban Planning
Monetary policy
Regional/Spatial Science
Social Sciences
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Summary:This paper examines the China–ASEAN (Association of Southeast Asian Nations)-5 bilateral trade balances by using a time-space simultaneous gravity model with a panel smooth transition regression specification. This model can investigate both internal and external bilateral trade. The empirical results show that a larger real interest rate differential between China and a member country of the ASEAN-5 would switch the negative spatial effect to a positive one, causing a higher average spatial effect from the bilateral trade balance. The time-varying marginal effects of the determinants of bilateral trades are verified. However, the geographical distance of each country pair remains the most important deterrent to China–ASEAN-5 bilateral trade.
ISSN:1874-463X
1874-4621
DOI:10.1007/s12061-015-9175-x