INTERNATIONAL TRANSMISSION MECHANISM AND WORLD BUSINESS CYCLE

Understanding international transmission mechanism that generates the world business cycle is of immense interest. In this paper, we compile a rich global dataset and utilize a trade‐linked structural vector autoregression (SVAR) model with a relatively realistic identification scheme to construct a worldwide dynamic interdependency system. Empirical results indicate that the trade‐linked SVAR system can largely capture the common dynamic properties of national business cycle fluctuations, providing a meaningful transmission foundation to the world business cycle derived from dynamic factor models. Based on the worldwide trade‐linked SVAR system, we further shed light on three crucial topics in international economics. The findings and methods in this paper help to evaluate the macroeconomic consequences of recent trade dispute between world major economies. (JEL F41, F44, O19)

• Publication year

  2020

• Venue

  Economic Inquiry

• Publication date

  Unknown publication date

• Fields of study

  Business, Economics

• Identifiers
  DOI 10.1111/ecin.12916
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

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