IMF Working Papers

International Spillovers of Macroeconomic Shocks: A Quantitative Exploration

By Douglas Laxton, Eswar S Prasad

June 1, 2000

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Douglas Laxton, and Eswar S Prasad. International Spillovers of Macroeconomic Shocks: A Quantitative Exploration, (USA: International Monetary Fund, 2000) accessed September 26, 2024
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.

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

Keywords: Choice of inflation target, Closed economy, Current account balance, Economy, GDP ratio, Global, Inflation, Inflation environment, Inflation rate, Inflation-unemployment trade-off, Int. rate, Interest rate floor, International spillovers, Macroeconometric simulations, Macroeconomic shocks, Monetary policy, Nominal effective exchange rate, Nominal interest rate, Nominal interest rate floor, Price level, Unemployment rate, United States economy, WP

Publication Details

  • Pages:

    15

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2000/101

  • Stock No:

    WPIEA1012000

  • ISBN:

    9781451852509

  • ISSN:

    1018-5941