The Dynamic Interrelations between Unequal Neighbors: An Austro-German Case Study

Klaus Prettner and Robert Kunst ()

Vienna Economics Papers from University of Vienna, Department of Economics

Abstract: This article investigates the effects and transmission channels of shocks between two 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 that there are large and significant effects of shocks to the German economy on Austria. In contrast, the effects of shocks to the Austrian economy on Germany are barely significant and if they are, their magnitude is comparatively small. Furthermore we can show that multiplier effects are present in Germany but not in Austria and we identify hysteretic properties in Austrian unemployment.

JEL-codes: C32 C53 F41 (search for similar items in EconPapers)
Date: 2009-08
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Journal Article: The dynamic interrelations between unequal neighbors: an Austro-German case study (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:vie:viennp:vie0913

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