IDEAS home Printed from https://ideas.repec.org/p/imf/imfwpa/10-239.html
   My bibliography  Save this paper

Deconstructing the International Business Cycle; Why does a U.S. sneeze give the rest of the world a cold?

Author

Listed:
  • International Monetary Fund

Abstract

The 2008 crisis underscored the interconnectedness of the international business cycle, with U.S. shocks leading to the largest global slowdown since the 1930s. We estimate spillover effects across major advanced country regions in a structural VAR (SVAR) using pre-crisis data. Our new method freely estimates the contemporaneous correlation matrix for underlying shocks in the VAR and (uniquely, to our knowledge) the associated uncertainty. Our results suggest that the international business cycle is largely driven by U.S. financial shocks with a significant impact from global shocks, mainly reflecting commodity prices. Other advanced economic regions play a much smaller and regional role in growth spillovers. Our findings are consistent with the emerging evidence on the current crisis

Suggested Citation

  • International Monetary Fund, 2010. "Deconstructing the International Business Cycle; Why does a U.S. sneeze give the rest of the world a cold?," IMF Working Papers 10/239, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:10/239
    as

    Download full text from publisher

    File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=24296
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joseph E. Gagnon & Tamim Bayoumi & Juan M. Londono & Christian Saborowski & Horacio Sapriza, 2017. "Unconventional Monetary and Exchange Rate Policies," International Finance Discussion Papers 1194, Board of Governors of the Federal Reserve System (U.S.).
    2. Montinari, Letizia & Stracca, Livio, 2016. "Trade, finance or policies: What drives the cross-border spill-over of business cycles?," Journal of Macroeconomics, Elsevier, vol. 49(C), pages 131-148.
    3. Michaelides, Panayotis G. & Papageorgiou, Theofanis, 2012. "On the transmission of economic fluctuations from the USA to EU-15 (1960–2011)," Journal of Economics and Business, Elsevier, vol. 64(6), pages 427-438.
    4. Truman, Edwin M., 2014. "The Federal Reserve engages the world (1970-2000): an insider's narrative of the transition to managed floating and financial turbulence," Globalization and Monetary Policy Institute Working Paper 210, Federal Reserve Bank of Dallas.
    5. Leif Anders Thorsrud, 2013. "Global and regional business cycles. Shocks and propagations," Working Papers No 3/2013, Centre for Applied Macro- and Petroleum economics (CAMP), BI Norwegian Business School.
    6. Rania Antonopoulos & Kijong Kim & Tom Masterson & Ajit Zacharias, 2010. "Investing in Care: A Strategy for Effective and Equitable Job Creation," Economics Working Paper Archive wp_610, Levy Economics Institute.
    7. Francis, Neville & Owyang, Michael T. & Soques, Daniel, 2015. "Does the United States Lead Foreign Business Cycles?," Review, Federal Reserve Bank of St. Louis, vol. 97(2), pages 133-158.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:10/239. 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: (Jim Beardow) or (Hassan Zaidi). General contact details of provider: http://edirc.repec.org/data/imfffus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.