International Spillovers of Macroeconomic Shocks

A Quantitative Exploration
  • Douglas Laxton
  • Eswar S. Prasad


The increasing integration of the world economy in recent decades, through trade and capital flows, is a well-documented phenomenon. Such integration has many advantages, including the benefits of specialization, enhanced diversification of country-specific risks, and the optimal allocation of capital investment. However, a corollary to this integration is the possibility of more rapid transmission of macroeconomic shocks across national borders. This has implications for the analysis of economic fluctuations in an international context (see, e.g., Lumsdaine and Prasad, 1997) as well as for the conduct of macroeconomic policy in response to exogenous shocks, either domestic or external.


Interest Rate Monetary Policy International Monetary Fund Euro Area Nominal Interest Rate 
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Copyright information

© Springer Science+Business Media New York 2001

Authors and Affiliations

  • Douglas Laxton
    • 1
  • Eswar S. Prasad
    • 1
  1. 1.International Monetary Fund (IMF)USA

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