Chapter 9 China and US Economic Policy Uncertainty and its Impact on Major International Markets: A Vector Auto Regressive Analysis

The US–China conflicts surrounding the imposition of tariffs have caused a stir in the global markets. Various attempts have been made to understand the rationale and causes as well as its impact on the various ­aspects of the international market. There are many unanswered questions pertaining to China’s emergence as a global superpower and the ­possible threats that it poses to the Western dominated market. Based on this background, the chapter is an attempt to investigate the impacts of the Economic Policy Uncertainty (EPU) of the United States and China on three most important global markets, namely, crude oil, credit market, and commodity ­market. To attain the objectives of the chapter, the study has utilized Vector Auto Regressive model and has analyzed the results. The study concludes that China’s EPU has lesser impact on the global market as compared to the US EPU. On the basis of the results obtained, few policy implications have been proposed.