FDI, growth and trade partisan conflict in the US: TVP-BVAR approach

  • Yifei CaiEmail author
  • Angeliki Menegaki


This paper utilizes time-varying parameters Bayesian vector auto-regression model with stochastic volatility approach to investigate the time-varying dynamic relation between FDI, growth and trade partisan conflict in the US. The empirical results confirm that an increase in trade partisan conflict will deter FDI inflows to the US and discourage economic activities. Besides, we also examine the responses of equity investment, intra-company loans and reinvestment earnings given trade partisan conflict shock. In a robustness check, we consider different measurements on FDI and other control variables. The negative role of a trade partisan conflict shock is not altered, indicating the robustness of the findings. Moreover, trade partisan conflicts like GATT, Omnibus Bill Veto, NAFTA, Bush versus Kerry, the financial crisis and TPP are key factors which affect the dynamics. The US government should remedy the negative impacts of trade policy conflict on FDI inflows and economic growth.


Trade partisan conflict FDI Growth Time-varying Bayesian VAR 



General Agreement on Tariffs and Trade


North American Free Trade Agreement


Trans-Pacific Partnership

JEL Classification

C11 E62 F21 F3 



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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Department of Ecconomics, Business SchoolThe University of Western AustraliaPerthAustralia
  2. 2.Department of Economics and Management of Tourist UnitsAgricultural University of AthensAmfissaGreece
  3. 3.Hellenic Open UniversityPatrasGreece
  4. 4.Open University of CyprusNicosiaCyprus

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