Trade Linkages and Output-Multiplier Effects: A Structural VAR Approach with a Focus on Asia
34 Pages Posted: 28 Apr 2002
There are 2 versions of this paper
Trade Linkages and Output-Multiplier Effects: A Structural VAR Approach with a Focus on Asia
Trade Linkages and Output-Multiplier Effects: A Structural VAR Approach with a Focus on Asia
Date Written: November 2001
Abstract
This paper develops a structural VAR model to measure how a shock to one country can affect the GDP of other countries. It uses trade linkages to estimate the multiplier effects of a shock as it is transmitted through other countries' output fluctuations. The paper introduces a new specification strategy that significantly reduces the number of unknowns and allows cross-country relationships to vary over time. Then it uses this model to examine the impact of shocks to 11 Asian countries, the U.S. and the rest of the OECD. The model produces reasonably good short-term forecasts. Impulse-response matrices suggest that these multiplier effects are large and significant and can transmit shocks in very different patterns than predicted from a bilateral-trade matrix. For example, due to these output-multiplier effects, a shock to one country can have a large impact on countries that are relatively minor bilateral trading partners.
JEL Classification: C32, C50
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Are Trade Linkages Important Determinants of Country Vulnerability to Crises?
-
The Transmission of Financial Stress from Advanced to Emerging Economies
By Ravi Balakrishnan, Stephan Danninger, ...
-
Trade Linkages and Output-Multiplier Effects: A Structural VAR Approach with a Focus on Asia
-
The Architecture of Globalization: A Network Approach to International Economic Integration
By Javier A. Reyes and Raja Kali
-
Financial Contagion on the International Trade Network
By Raja Kali and Javier A. Reyes
-
The Role of the United States in the Global Economy and Its Evolution over Time
-
The International Trade Network in Space and Time
By Angela Abbate, Luca De Benedictis, ...
-
Trade Linkages and Macroeconomic Effects of the Price of Oil
By Iikka Korhonen and Svetlana Ledyaeva