Spillovers of Domestic Shocks: Will They Counteract the “Great Moderation”?
IMF Working Papers, March 1, 2010
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- Spillovers of Domestic Shocks: Will They Counteract the “Great Moderation”?
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Bibliographic details
- Authors: Ashoka Mody, Alina Carare
- Published: March 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451982213.001
Overview and authorship
- Authors: Ashoka Mody, Alina Carare
- Date: March 1, 2010
- Publication type: IMF Working Paper
- Series: Working Paper No. 2010/078
- Issue: 078
- Volume: 2010
- Pages: 29
- DOI: https://doi.org/10.5089/9781451982213.001
- Stock No: WPIEA2010078
- ISBN: 9781451982213
- ISSN: 1018-5941
- 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."
Key findings
- Output growth volatility, following a protracted decline, was flattening or mildly rising in some countries even prior to the extreme volatility recently observed.
- From the mid-1990s there was an increasing tendency for shocks in one country to transmit rapidly to other countries, creating the potential for heightened global volatility.
- The higher sensitivity to foreign shocks appears related to stepped-up vertical specialization associated with the integration of emerging markets in international trade.
- Increased international spillovers raise the need for stronger ex post coordination mechanisms when shocks are large.
- The authors argue that the best ex ante prevention strategy likely remains sensible national policies.
Subjects and keywords
- Subject: Financial crises, Production growth, Spillovers, Stocks, Structural vector autoregression
- Keywords: GDP ratio, global economy, trade share, WP
Policy implications and recommendations
- Strengthen ex post coordination mechanisms to manage large international shocks.
- Prioritize sensible national policies as the preferred ex ante strategy to prevent or mitigate spillovers and heightened global volatility.
Source: IMF Working Paper "Spillovers of Domestic Shocks: Will They Counteract the “Great Moderation”?" by Ashoka Mody and Alina Carare, March 1, 2010.
Content in this bundle
- _wp1078 — Section 5: Role of Trade Globalization in the Change of Spillovers