The Impact of the US Economy on the Asia-Pacific Region: Does It Matter?

Journal of Asian Economics, Vol. 14, pp. 219-241, 2003

Posted: 10 May 2011

See all articles by Frank S.T. Hsiao

Frank S.T. Hsiao

University of Colorado at Boulder

Mei-Chu W. Hsiao

University of Colorado at Denver - Department of Economics

Akio Yamashita

Ryukoku University

Date Written: February 2003

Abstract

We first confirm the interdependence of the United States and the Asia-Pacific region, and explore the real linkage through trade and investment, and the financial linkage through stock markets. These linkages are strengthened by the recent information technology (IT) revolution. The pairwise and vector autoregression (VAR) model are used to test the Granger causality of real linkage in terms of GDP and the financial linkage in terms of the daily stock price indices among these countries. Impulse response functions and variance decomposition from VAR are illustrated. Our results show that there is no significant unidirectional causality from the US GDP to Japan, Taiwan, Korea, and China. But the slump in the US stock price indices will cause the stock market recession in Japan, Korea, and Taiwan, but not China.

Keywords: US and Asia Pacific, Regional interdependence, IT revolution, VAR, Causality

JEL Classification: F41, C32, E32, E44, O53

Suggested Citation

Hsiao, Frank S.T. and Hsiao, Mei-Chu W. and Yamashita, Akio, The Impact of the US Economy on the Asia-Pacific Region: Does It Matter? (February 2003). Journal of Asian Economics, Vol. 14, pp. 219-241, 2003, Available at SSRN: https://ssrn.com/abstract=1836131

Frank S.T. Hsiao (Contact Author)

University of Colorado at Boulder ( email )

Campus Box 256
Boulder, CO 80309-256
United States
303-492-6394 (D) (Phone)
303-492-8960 (D) (Fax)

Mei-Chu W. Hsiao

University of Colorado at Denver - Department of Economics ( email )

Campus Box 181
P.O. Box 173364
Denver, CO 80217-3364
United States
303-556-8322 (Phone)
303-556-3547 (Fax)

Akio Yamashita

Ryukoku University ( email )

67 Tsukamoto-cho, Fukakusa
Fushimi-ku
Kyoto
Japan

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