Commodity Markets and the International Transmission of Fiscal Shocks

38 Pages Posted: 15 Feb 2006

See all articles by Carmen M. Reinhart

Carmen M. Reinhart

Peter G. Peterson Institute for International Economics; National Bureau of Economic Research (NBER)

Date Written: December 6, 1988

Abstract

The "engine of growth" argument holds that an economic expansion in a large country increases the growth of its trading partners. Growth in developing countries is routinely linked to growth patterns in the industrial economies. This paper examines the role of commodity markets in transmitting disturbances internationally and finds that contrary to the implications of the "engine of growth" argument, a fiscal-induced expansion in a large commodity-importing country could either increase or decrease growth in the developing commodity-exporting country, and unambiguously reduces output in the second commodity-importing country.

JEL Classification: 3210, 4114

Suggested Citation

Reinhart, Carmen M., Commodity Markets and the International Transmission of Fiscal Shocks (December 6, 1988). IMF Working Paper, Vol. , pp. 1-38, 1988. Available at SSRN: https://ssrn.com/abstract=885107

Carmen M. Reinhart (Contact Author)

Peter G. Peterson Institute for International Economics ( email )

1750 Massachusetts Avenue, NW
Washington, DC 20036
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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