History Matters in International Relations: Evidence from Long-Memory Processes in Sino-American Cycles

30 Pages Posted: 18 Oct 2019

See all articles by Carlos D. Ramirez

Carlos D. Ramirez

George Mason University - Department of Economics

Yingxin Du

University of International Business and Economics (UIBE)

Date Written: July 2019

Abstract

Measures of bilateral political relations are typically long-memory (fractionally integrated) processes. Appropriate inference and interpretation of this property hinges on the underlying reasons behind it. There are three possible explanations: (i) mechanical aggregation, (ii) bilateral relations history, and (iii) structural breaks. Explanations (i) and (iii) are data-induced, and thus not particularly meaningful. Explanation (ii) indicates that long-memory is a genuine feature in the series’ dynamics. Using Sino-American relations as a case study, we conduct three tests to identify the underlying cause. We first examine the stability of the long-memory parameter over the sample period (1980-2018), and discard structural breaks. Next, we evaluate the long- memory parameter for U.S.-China political relations, and for seven issues in the bilateral political relations portfolio. Finally, we investigate whether bilateral political relations and each of the issues are fractionally cointegrated. Our results suggest that the bilateral relations history is pivotal for explaining the observed fractional integration.

Keywords: Sino-American relations, fractional integration, spectral regressions, long-memory processes

JEL Classification: F50, C32

Suggested Citation

Ramirez, Carlos D. and Du, Yingxin, History Matters in International Relations: Evidence from Long-Memory Processes in Sino-American Cycles (July 2019). GMU Working Paper in Economics No. 19-33. Available at SSRN: https://ssrn.com/abstract=3470845 or http://dx.doi.org/10.2139/ssrn.3470845

Carlos D. Ramirez (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Enterprise Hall MSN 3G4
Fairfax, VA 22030
United States
703-993-1130 (Phone)
703-993-1133 (Fax)

Yingxin Du

University of International Business and Economics (UIBE) ( email )

10, Huixin Dongjie
Changyang District
Beijing, Beijing 100029
China

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