The dynamic interrelations between unequal neighbors: an Austro-German case study

Klaus Prettner and Robert Kunst ()

Empirical Economics, 2012, vol. 43, issue 2, 761 pages

Abstract: This article investigates the effects and the transmission of shocks between asymmetric neighboring countries. In particular, we investigate Austria and Germany which are highly integrated due to their common language and common membership of the European Monetary Union. Generalized impulse response functions reveal large and significant effects of shocks to the German economy on Austria. By contrast, the effects of shocks to the Austrian economy on Germany are barely significant and if they are, their magnitude is small. Furthermore, we can show that multiplier effects exist in Germany but not in Austria and we identify hysteretic properties in Austrian unemployment. Copyright Springer-Verlag 2012

Keywords: Structural vector error correction model; Open economies; Economic integration; Generalized impulse response analysis (search for similar items in EconPapers)
Date: 2012
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Working Paper: The Dynamic Interrelations between Unequal Neighbors: An Austro-German Case Study (2009)
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DOI: 10.1007/s00181-011-0504-x

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