 A structural approach to measuring the degree of economic integration: Evidence from G-7 countriesJournal of International Money and Finance, 2022, vol. 124, issue C Abstract: This paper infers the degree of economic integration amongst G-7 countries by estimating a two country DSGE model separately for each country in the group. In doing so, the two economies in the model are represented by the observations for a specific country and the corresponding values for the rest of G-7. To infer the degree of economic integration, the model’s shock processes are reconfigured so that they include a component that is common for each economy and shocks can be transmitted from one economy to the other. Capturing the degree of economic integration by the relative contribution of common and foreign shocks to the variation of domestic variables, the paper draws inferences that are at odds with those based on more traditional measures of globalization. Countries that are more open to trade and financial flows in the data are ranked lower in terms of economic integration according to post-estimation statistics. Keywords: Economic integration; DSGE; Open economy; G-7; Bayesian estimation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jimfin:v:124:y:2022:i:c:s0261560622000353 DOI: 10.1016/j.jimonfin.2022.102632 Access Statistics for this article Journal of International Money and Finance is currently edited by J. R. Lothian More articles in Journal of International Money and Finance from Elsevier |
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