Working Paper: NBER ID: w1021
Authors: John F. Helliwell; Tim Padmore
Abstract: In this paper we examine the structure and empirical results from several groups of linked econometric models. The main focus of the paper is on the international transmission of fiscal policies, monetary policies, and oil price shocks, under both fixed and flexible exchange rates. The linkage models are divided into four groups: projects based on available national models; projects using structural models designed with monetary and exchange rate linkages in mind; projects focussed mainly on trade linkages; and projects using very small national models with common structure. Each group comprises from two to four projects. Comparable results on the transmission of fiscal policy under fixed exchange rates are available for eight projects, while four projects provide evidence on the domestic and international effects of monetary policy and oil price shocks.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Fiscal policy shocks in country i (H39) | Economic outcomes in country j (O57) |
| Fiscal policy shocks in country i (H39) | Size of country i's multiplier (O57) |
| Size of country i's multiplier (O57) | Economic outcomes in country j (O57) |
| Fiscal policy shocks in country i (H39) | Marginal propensity to import from country j (F14) |
| Marginal propensity to import from country j (F14) | Economic outcomes in country j (O57) |
| Nature of exchange rate regimes (F33) | Size and direction of fiscal multipliers (E62) |
| Tighter monetary policy in one country (E52) | Complex responses in partner countries (F35) |
| Oil price shocks (Q43) | Changes in real GDP and inflation rates across linked economies (E31) |