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US macroeconomic shocks and international business cycle

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  • Wesołowski, Grzegorz
  • Gurshev, Oleg

Abstract

This study investigates the influence of six distinct shocks originating in the US on the international business cycle. To this end, it utilizes impulse response functions and forecast error variance decompositions from panel local projections. We find that key US macroeconomic shocks contribute significantly to business cycle synchronization between the US and other economies. These shocks also explain a considerable share of output fluctuations in the panel of twenty-one countries. Investigating the spillovers of US innovations in subsamples, we document that their effects are particularly strong in Emerging Market Economies, key US trading partners, and countries with close financial linkages to the US. Among the individual shocks, technology and financial shocks are the most important drivers of the spillovers.

Suggested Citation

  • Wesołowski, Grzegorz & Gurshev, Oleg, 2026. "US macroeconomic shocks and international business cycle," Journal of International Money and Finance, Elsevier, vol. 164(C).
    • Handle: RePEc:eee:jimfin:v:164:y:2026:i:c:s0261560626000549
    DOI: 10.1016/j.jimonfin.2026.103569
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    Keywords

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    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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