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Do international spillovers matter for long run neutrality?

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  • Joaquim Pina

    (Universidade Nova de Lisboa)

Abstract

This paper examines whether international spillovers matter for long run neutrality. Using as small open economy Canada, and U.S. for relevant foreign economy, we run three separate VAR systems, with none, some and all cross-border effects. We compare impulse responses and variance decompositions across the systems. We conclude that, for Canada, unless international spillovers are considered, one can mistakenly find that long run neutrality does not hold.

Suggested Citation

  • Joaquim Pina, 2009. "Do international spillovers matter for long run neutrality?," Economics Bulletin, AccessEcon, vol. 29(3), pages 1570-1587.
    • Handle: RePEc:ebl:ecbull:eb-07e40005
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    Keywords

    VAR Identification;

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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