Introduction

The fact that the United States are considered, de facto, as the ‘engine’ of the world economy has been a puzzle for at least a full generation of economists. How can it be that an economy that represents only less than a fourth of world GDP could still have such a role, particularly when large and fast-growing economic players, like China, are potently emerging in the global economy? The empirical regularity, however, is unequivocally strong, as all past US recessions have typically coincided with significant reductions in global growth (IMF, 2007). In this context, the current recession is no exception if one excludes some shortlived ‘decoupling’ at an earlier stage of the crisis. In looking for reasons for such a leading role, it is obvious that size cannot be the whole story. That engine role has rather to do with the whole set of interactions, which — departing from the US — tend to reverberate, amplified, to the rest of the world. Such interactions include all sort of transmission channels related to trade links, financial interconnections in globally interlinked markets, as well as other more ‘mood’ related variables such as confidence indicators of consumers and business operators.