Growth Spillover Dynamics From Crisis to Recovery

September 1, 2011

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Helene Poirson, and Sebastian Weber. Growth Spillover Dynamics From Crisis to Recovery, (USA: International Monetary Fund, 2011) accessed November 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

Can positive growth shocks from the faster-growing countries in Europe spill over to the slower growing countries, providing useful tailwinds to their recovery process? This study investigates the potential relevance of growth spillovers in the context of the crisis and the recovery process. Based on a VAR framework, our analysis suggests that the U.S. and Japan remain the key source of growth spillovers in this recovery, with France also playing an important role for the European crisis countries. Notwithstanding the current export-led cyclical upswing, Germany generates relatively small outward spillovers compared to other systemic countries, but likely plays a key role in transmitting and amplifying external growth shocks to the rest of Europe given its more direct exposure to foreign shocks compared to other European countries. Positive spillovers from Spain were important prior to the 2008 - 09 crisis, however Spain is generating negative spillovers in this recovery due to a depressed domestic demand. Negative spillovers from the European crisis countries appear limited, consistent with their modest size.

Subject: Exports, Financial crises, Financial sector policy and analysis, International trade, Negative spillovers, Production, Production growth, Spillovers

Keywords: Crisis, EMU country, Euro zone, Europe, Exports, Financial crisis, GDP growth, Germany, Global, Growth, Growth rate, Growth shock, Negative spillovers, Originating country, Production growth, Recovery, Spillover effect, Spillovers, Third-country effect, Transmission mechanism, WP

Publication Details

Pages:

50
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/218
Stock No:

WPIEA2011218
ISBN:

9781463903510
ISSN:

1018-5941

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