Commodity markets and the international transmission of fiscal shocks

Carmen Reinhart

MPRA Paper from University Library of Munich, Germany

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.

Keywords: commodity; prices; fiscal; policy; trade; exports (search for similar items in EconPapers)
JEL-codes: E32 F10 (search for similar items in EconPapers)
Date: 1988-12
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Fiscal Policy, the Real Exchange Rate, and Commodity Prices (1991)
Working Paper: Fiscal Policy, the Real Exchange Rate, and Commodity Prices (1991)
Working Paper: Fiscal policy, the real exchange rate and commodity prices: A global framework (1990)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13411

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