International Spillovers of Macroeconomic Shocks: A Quantitative Exploration

Author/Editor:

Douglas Laxton ; Eswar S Prasad

Publication Date:

June 1, 2000

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper provides a quantitative exploration of international spillovers of macroeconomic shocks among the major industrial economies. The particular topical example analyzed here concerns the possible effects on the industrial economies of adverse shocks to the current U.S. economic expansion. The potential spillover effects of U.S. shocks to other industrial economies are found to be quite large. Extant economic conditions, particularly the low levels of nominal interest rates and the consequent possibility of liquidity traps in countries such as Japan, could significantly magnify these spillover effects.

Series:

Working Paper No. 2000/101

Subject:

Balance of payments Current account balance Foreign exchange Inflation Interest rate floor Labor Monetary policy Nominal effective exchange rate Prices Unemployment rate

English

Publication Date:

June 1, 2000

ISBN/ISSN:

9781451852509/1018-5941

Stock No:

WPIEA1012000

Pages:

15

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