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GDP-spillovers in multi-country models

Rudy Douven and Marga Peeters ()

MPRA Paper from University Library of Munich, Germany

Abstract: Spillovers resulting from fiscal and monetary policy are compared and analysed in small static, small dynamic and large dynamic multi-country models. To compare the size of the spillovers, we consider simulations in which GDP for a certain number of years is held one percent above base in the country where the shock originates. The results indicate that spillovers are large in size. An important transmission mechanism in the contribution to foreign GDP is found to be the foreign real interest rate, contributions to foreign GDP generated through trade are found to be small. In empirical models with endogenous exchange and interest rates, it was found that under floating exchange rate regimes spillovers are much smaller than under pegged exchange rate regimes. Furthermore, we note that under floating exchange rate regimes, spillovers seem to be larger in small dynamic models than in large empirical models.

Keywords: fiscal shock; monetary shock; multi-country model; GDP; spillover; exhange rate regime; econometric modeling (search for similar items in EconPapers)
JEL-codes: E62 F4 C5 E52 F43 (search for similar items in EconPapers)
Date: 1998
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Journal Article: GDP-spillovers in multi-country models (1998) Downloads
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