The Euro Crisis and Swedish GDP Growth — A Study of Spillovers
AbstractIn this paper, a Bayesian VAR model is used to study the effects of euro area shocks on GDP growth in the small open economy of Sweden. A novel feature is that the new policy uncertainty index of Baker et al.(2013) is introduced in the model. The model behaves well in terms of reasonable impulse response functions. The specific effects of the euro crisis are investigated through a historical decomposition which shows that shocks to euro area GDP growth have been a reasonably important factor for Swedish GDP growth, supporting it during 2010 and holding it back thereafter. Generally, shocks to policy uncertainty have held back Swedish GDP growth during the euro crises.
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Bibliographic InfoPaper provided by National Institute of Economic Research in its series Working Paper with number 134.
Length: 15 pages
Date of creation: 25 Mar 2014
Date of revision:
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More information through EDIRC
Small open economy; Bayesian VAR; Policy uncertainty index;
Find related papers by JEL classification:
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
- F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-04-11 (All new papers)
- NEP-EEC-2014-04-11 (European Economics)
- NEP-FDG-2014-04-11 (Financial Development & Growth)
- NEP-GER-2014-04-11 (German Papers)
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