International Transmission of Growth Shocks and the World Business Cycle
Yifan Shen () and
Tilak Abeysinghe ()
SCAPE Policy Research Working Paper Series from National University of Singapore, Department of Economics, SCAPE
It is a stylized fact that growth shocks in major economies generate the world business cycle, which is usually extracted from dynamic factor models. We utilize a trade-linked SVAR model with a realistic identification scheme to capture the transmission mechanism, covering 60 major economies and the rest of the world. We show that the SVAR structure provides a meaningful economic foundation to factor-modelbased statistical analyses. In addition, the SVAR model shows the important role played by indirect multiplier channels in the transmission mechanism and how these effects change over time. Specific attention is paid to the transmission of US and China growth shocks.
Keywords: Trade-linked SVAR; Dynamic Factor Model; International Transmission Mechanism; World Business Cycle; Indirect Multiplier Effect (search for similar items in EconPapers)
JEL-codes: F41 F44 O19 (search for similar items in EconPapers)
Pages: 35 pages
New Economics Papers: this item is included in nep-opm and nep-sea
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Persistent link: https://EconPapers.repec.org/RePEc:sca:scaewp:1602
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