France in the Global Economy: A Structural Approximate Dynamic Factor Model Analysis

By Francisco d Nadal De Simone, Alain N. Kabundi

June 1, 2007

Preview Citation

Format: Chicago

Francisco d Nadal De Simone, and Alain N. Kabundi France in the Global Economy: A Structural Approximate Dynamic Factor Model Analysis, (USA: International Monetary Fund, 2007) accessed December 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This study identifies the main shocks that cause fluctuations in French output and their channels of transmission. It uses a large-dimensional structural approximate dynamic factor model. There are three main findings. First, common shocks, especially demand shocks, which seem to originate from the U.S., play an important role in explaining French economic activity. While international trade, relative prices, and FDI flows are the main channels of transmission, the stock market, consumer confidence, and interest rates also matter. Second, France's integration with the rest of the world has increased over time. Third, there is some tentative evidence of regional components in explaining French output fluctuations; countryspecific components also contribute. The predominance of exogenous factors affecting French output, the asymmetry in the transmission of shocks, and France's participation in a currency area, argue for making French goods, services, and labor markets as flexible as possible.

Subject: Current account balance, Foreign direct investment, Long term interest rates, Short term interest rates, Supply shocks

Keywords: Consumer confidence, Error variance, Supply shock, WP

Publication Details

Pages:

45
Volume:

---
DOI:

---
Issue:

---
Series:

Working Paper No. 2007/129
Stock No:

WPIEA2007129
ISBN:

9781451866933
ISSN:

1018-5941

FACTSHEETS

RESOURCES

TOPICS

Flagship Publications

Other Publications

IMF reports and publications by country

Regional Offices

All News

See Also

For Journalists

Press Center

RESOURCES

FLAGSHIPS

KEY SERIES

IMF NOTES

IMF Working Papers