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The Dynamic Interrelations between Unequal Neighbors: An Austro-German Case Study

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Abstract

This article investigates the effects and transmission channels of shocks between two asymmetric neighboring countries. In particular, we investigate Austria and Germany which are highly integrated due to their common language and common membership of the European Monetary Union. Generalized impulse response functions reveal that there are large and significant effects of shocks to the German economy on Austria. In contrast, the effects of shocks to the Austrian economy on Germany are barely significant and if they are, their magnitude is comparatively small. Furthermore we can show that multiplier effects are present in Germany but not in Austria and we identify hysteretic properties in Austrian unemployment.

Suggested Citation

  • Klaus Prettner & Robert M. Kunst, 2009. "The Dynamic Interrelations between Unequal Neighbors: An Austro-German Case Study," Vienna Economics Papers 0913, University of Vienna, Department of Economics.
  • Handle: RePEc:vie:viennp:0913
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    Cited by:

    1. Andreas Brunhart, 2013. "Der Klein(st)staat Liechtenstein und seine grossen Nachbarländer: Eine wachstums- und konjunkturanalytische Gegenüberstellung," Arbeitspapiere 44, Liechtenstein-Institut.
    2. Andreas Brunhart, 2015. "The Swiss Business Cycle and the Lead of Small Neighbor Liechtenstein," Arbeitspapiere 51, Liechtenstein-Institut.
    3. Catherine Prettner & Klaus Prettner, 2012. " After Two Decades of Integration: How Interdependent are Eastern European Economies and the Euro Area?," Department of Economics Working Papers wuwp138, Vienna University of Economics and Business, Department of Economics.
    4. Keppel, Catherine & Prettner, Klaus, 2015. "How interdependent are Eastern European economies and the Euro area?," The Quarterly Review of Economics and Finance, Elsevier, vol. 58(C), pages 18-31.
    5. A. James Wynne & Chandrashekar Challa & John Palesis & Bernie Farkas, 2015. "A Conceptual Model: Impact Of Usage Of Social Media Tools To Enhance Project Management Success," Portuguese Journal of Management Studies, ISEG, Universidade de Lisboa, vol. 0(2), pages 55-72.
    6. Horácio C. Faustino & Isabel Proença, 2015. "Immigration And Intra-Industry Trade: The Relevance Of Language, Qualification And Economic Integration," Portuguese Journal of Management Studies, ISEG, Universidade de Lisboa, vol. 0(1), pages 3-18.

    More about this item

    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; State Space Models
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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