The Transmission of US Cyclical Developments to the Rest of the World

29 Pages Posted: 23 Aug 2007

See all articles by Stephane Dees

Stephane Dees

European Central Bank (ECB)

Isabel Vansteenkiste

European Central Bank (ECB)

Date Written: August 2007

Abstract

The US economy is often considered to play a pivotal role in global growth. Such a view has persisted despite the falling contribution of the US economy to global growth (from almost 30% in 1950 to around 20% at present). In this paper, we analyse the veracity of this conjecture and consider the implications of cyclical developments in the US economy on the rest of the world. Overall we find that while US economic developments would indeed affect the rest of the world, developments in most countries and regions remain primarily affected by idiosyncratic shocks as well as by global factors, which do not originate from a single country.

Keywords: Business Cycle, Global VAR model, Markov-switching model, Factor models

JEL Classification: E32, E37, F41

Suggested Citation

Dees, Stephane and Vansteenkiste, Isabel, The Transmission of US Cyclical Developments to the Rest of the World (August 2007). ECB Working Paper No. 798, Available at SSRN: https://ssrn.com/abstract=1005117

Stephane Dees (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Isabel Vansteenkiste

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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