GDP-Spillovers in Multi-Country Models

33 Pages Posted: 3 Jun 2011 Last revised: 22 Aug 2011

See all articles by Rudy Douven

Rudy Douven

CPB Netherlands Bureau for Economic Policy Analysis; CPB Netherlands Bureau for Economic Policy Analysis

Marga Peeters

De Nederlandsche Bank

Date Written: May 5, 1998

Abstract

Spillovers resulting from fiscal and monetary policy are compared and analysed in small static, small dynamic and large dynamic multi-country models. To compare the size of the spillovers, we consider simulations in which GDP for a certain number of years is held one percent above base in the country where the shock originates. The results indicate that spillovers are large in size. An important transmission mechanism in the contribution to foreign GDP is found to be the foreign real interest rate, contributions to foreign GDP generated through trade are found to be small. In empirical models with endogenous exchange and interest rates, it was found that under floating exchange rate regimes spillovers are much smaller than under pegged exchange rate regimes. Furthermore, we note that under floating exchange rate regimes, spillovers seem to be larger in small dynamic models than in large empirical models.

Keywords: Multi-Country Model, International Spillovers, Evaluation and Simulation

JEL Classification: C52, E62, F41

Suggested Citation

Douven, Rudy and Peeters, Marga, GDP-Spillovers in Multi-Country Models (May 5, 1998). Economic Modelling, Vol. 15, 1998, Available at SSRN: https://ssrn.com/abstract=1855931

Rudy Douven

CPB Netherlands Bureau for Economic Policy Analysis ( email )

P.O. Box 80510
The Hague, 2508 GM
Netherlands

HOME PAGE: http://www.cpb.nl/nl/org/homepages/rcmhd/

CPB Netherlands Bureau for Economic Policy Analysis ( email )

P.O. Box 80510
The Hague, 2508 GM
Netherlands

HOME PAGE: http://www.cpb.nl/nl/org/homepages/rcmhd/

Marga Peeters (Contact Author)

De Nederlandsche Bank ( email )

PO Box 98
1000 AB Amsterdam
Amsterdam, 1000 AB
Netherlands

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