Do countries catch cold when trading partners sneeze? Evidence from spillovers in the Baltics
How do countries respond to shocks from their major trading partners? This paper addresses the question in the context of the observed shifts in trade linkages between the Baltic countries and their major trading partners. Vector autoregression (VAR) models were used to examine the magnitude and sources of growth spillovers to the Baltics from key trading partners, as well as shocks from the real effective exchange rate (REER). Our results show there are significant cross-country spillovers to the Baltics, with spillovers from the EU outweighing those from Russia. Shocks to the REER generally depress growth in the Baltics, and this effect rises over time. We also find that financial and trade linkages are the dominant transmission channels of spillovers to the region, which explains the current realization of downside risks to the Baltics from the global slowdown. In general, therefore, these results suggest that the Baltics are susceptible to shocks from their key trading partners.
Volume (Year): 34 (2010)
Issue (Month): 2 ()
|Contact details of provider:|| Postal: |
Web page: http://www.fintp.hr/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marco Pani & Etibar Jafarov & Clinton R. Shiells, 2005. "Is Russia Still Driving Regional Economic Growth?," IMF Working Papers 05/192, International Monetary Fund.
- Tamim Bayoumi & Andrew Swiston, 2007.
"Foreign Entanglements; Estimating the Source and Size of Spillovers Across Industrial Countries,"
IMF Working Papers
07/182, International Monetary Fund.
- Tamim Bayoumi & Andrew Swiston, 2009. "Foreign Entanglements: Estimating the Source and Size of Spillovers Across Industrial Countries," IMF Staff Papers, Palgrave Macmillan, vol. 56(2), pages 353-383, June.
- Alicia García-Herrero & Juan M. Ruiz, 2008.
"Do trade and financial linkages foster business cycle synchronization in a small economy?,"
Banco de Espa�a Working Papers
0810, Banco de Espa�a.
- Alicia Garcia-Herrero & Juan M. Ruiz, 2008. "Do Trade and Financial Linkages Foster Business cycle Synchronization in a small economy?," Working Papers 0801, BBVA Bank, Economic Research Department.
- M. Ayhan Kose & Eswar Prasad & Marco Terrones, 2003.
"How Does Globalization Affect the Synchronization of Business Cycles?,"
IMF Working Papers
03/27, International Monetary Fund.
- M. Ayhan Kose & Eswar S. Prasad & Marco E. Terrones, 2003. "How Does Globalization Affect the Synchronization of Business Cycles?," American Economic Review, American Economic Association, vol. 93(2), pages 57-62, May.
- Kose, M. Ayhan & Prasad, Eswar & Terrones, Marco E., 2003. "How Does Globalization Affect the Synchronization of Business Cycles?," IZA Discussion Papers 702, Institute for the Study of Labor (IZA).
- Siem Jan Koopman & Jo�o Valle E Azevedo, 2008. "Measuring Synchronization and Convergence of Business Cycles for the Euro area, UK and US," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(1), pages 23-51, 02.
- M. Ayhan Kose & Christopher Otrok & Charles H. Whiteman, 2003. "International Business Cycles: World, Region, and Country-Specific Factors," American Economic Review, American Economic Association, vol. 93(4), pages 1216-1239, September.
- James H. Stock & Mark W. Watson, 2003.
"Understanding Changes in International Business Cycle Dynamics,"
NBER Working Papers
9859, National Bureau of Economic Research, Inc.
- James H. Stock & Mark W. Watson, 2005. "Understanding Changes In International Business Cycle Dynamics," Journal of the European Economic Association, MIT Press, vol. 3(5), pages 968-1006, 09.
- Jean Imbs, 2004.
"Trade, Finance, Specialization, and Synchronization,"
The Review of Economics and Statistics,
MIT Press, vol. 86(3), pages 723-734, August.
- Jean Imbs, 2003. "Trade, Finance, Specialization, and Synchronization," IMF Working Papers 03/81, International Monetary Fund.
- Imbs, Jean, 2003. "Trade, Finance, Specialization and Synchronization," CEPR Discussion Papers 3779, C.E.P.R. Discussion Papers.
- DeJong, David N, et al, 1992. "Integration versus Trend Stationarity in Time Series," Econometrica, Econometric Society, vol. 60(2), pages 423-33, March.
- Robert Inklaar & Richard Jong-A-Pin & Jakob de Haan, 2005.
"Trade and Business Cycle Synchronization in OECD Countries - a Re-examination,"
CESifo Working Paper Series
1546, CESifo Group Munich.
- Inklaar, Robert & Jong-A-Pin, Richard & de Haan, Jakob, 2008. "Trade and business cycle synchronization in OECD countries--A re-examination," European Economic Review, Elsevier, vol. 52(4), pages 646-666, May.
- Zarnowitz, Victor, 1992. "Business Cycles," National Bureau of Economic Research Books, University of Chicago Press, number 9780226978901, September.
- Vladimir Klyuev, 2008. "Real Implications of Financial Linkages Between Canada and the United States," IMF Working Papers 08/23, International Monetary Fund.
When requesting a correction, please mention this item's handle: RePEc:ipf:finteo:v:34:y:2010:i:2:p:143-160. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Martina Fabris)
If references are entirely missing, you can add them using this form.