Decoupling from the East Toward the West? Analyses of Spillovers to the Baltic Countries

Author/Editor:

International Monetary Fund

Publication Date:

June 1, 2009

Electronic Access:

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Summary:

This paper uses VAR models to examine the magnitude and sources of growth spillovers to the Baltics from key trading partners, as well asfrom the real effective exchange rate (REER). Our results show there are significant cross-country spillovers to the Baltics with those from the EU outweighing spillovers from Russia. Shocks to the REER generally depress growth in the Baltics, and this intensifies over time. We also find that financial and trade channels dominate the transmission of spillovers to the region which partly explains the realization of downside risks to the Baltics from the global slowdown.

Series:

Working Paper No. 09/125

Subject:

Baltics Commodity prices Cross country analysis Economic models Estonia European Union External shocks Financial crisis Latvia Lithuania Real effective exchange rates Regional shocks Russian Federation Spillovers Trade integration Vector autoregression

English

Publication Date:

June 1, 2009

ISBN/ISSN:

9781451872729/1018-5941

Stock No:

WPIEA2009125

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

38

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