Growth Spillover Dynamics from Crisis to Recovery

51 Pages Posted: 28 Sep 2011

See all articles by Hélène Poirson

Hélène Poirson

International Monetary Fund (IMF) - Research Department

Sebastian Weber

International Monetary Fund (IMF)

Date Written: September 2011

Abstract

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.

Keywords: Cross country analysis, Economic growth, Economic recovery, Euro Area, Europe, Financial crisis, Germany, Global Financial Crisis 2008-2009, Spillovers

Suggested Citation

Poirson Ward, Helene and Weber, Sebastian, Growth Spillover Dynamics from Crisis to Recovery (September 2011). IMF Working Paper No. 11/218, Available at SSRN: https://ssrn.com/abstract=1934655

Helene Poirson Ward (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Sebastian Weber

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
79
Abstract Views
541
rank
369,189
PlumX Metrics