Transmission Channels and Spillover Effects in a Globalised World

  • The first study readdresses the determinants of business cycle synchronisation to test, on the one hand, whether FDI promoting policies may have consequences for the business cycle comovement between countries, and on the other hand, whether more plausible identification strategies change previous results. Our results suggest that linkages through foreign direct investment contribute in most cases positively to the synchronisation between country pairs. In contrast, the beneficial effects of trade integration for the similarity of business cycles are less robust and thus less important for the transmission of idiosyncratic shocks between countries than previously thought. Finally, we find that larger differences in the sector structure between two economies result in a bigger gap between their business cycles. While a widespread consensus exists among macroeconomists that the German labour market reforms in 2003-2005 have successfully contributed to the decline of the unemploymentThe first study readdresses the determinants of business cycle synchronisation to test, on the one hand, whether FDI promoting policies may have consequences for the business cycle comovement between countries, and on the other hand, whether more plausible identification strategies change previous results. Our results suggest that linkages through foreign direct investment contribute in most cases positively to the synchronisation between country pairs. In contrast, the beneficial effects of trade integration for the similarity of business cycles are less robust and thus less important for the transmission of idiosyncratic shocks between countries than previously thought. Finally, we find that larger differences in the sector structure between two economies result in a bigger gap between their business cycles. While a widespread consensus exists among macroeconomists that the German labour market reforms in 2003-2005 have successfully contributed to the decline of the unemployment rate, critics claim that the reforms led to wage restraint and consequently consumption dampening accompanied by beggar-thy-neighbour effects, harming Germany's trade partners. In the second study, we check up on the validity of these arguments by means of a two-country DSGE model featuring intra-industry trade and labour market frictions. Our results suggest that the disproportional growth of GDP (labour productivity) in comparison to consumption (wages) are only partially driven by the reforms. However, we do not find that the reforms contribute to Germany's trade surplus and cause negative spillovers to trading partners in terms of output and employment. In the third study, the size of spillover effects to employment in a foreign country after a labour market reform in the domestic country is explored. In contrast to previous studies focusing on a two-country scenario the presence of a third (large) country is considered. Thus, indirect spillover effects caused by shifts in the relation of the country of interest and a third country are explicitly included in addition to the direct spillover effect stemming from shifts between the country of interest and the domestic country. In order to assess the direction and strength of these spillover components, I conduct simulations based on a standard international RBC model with search and matching frictions in the labour market expanded to include a third country. I find that the aggregated spillover size measured relative to the effect in the domestic country can be sizeable. It can reach the empirically estimated size of about one-tenth for specific country characteristics. Variation in the size of the spillover effects stems, however, mainly from changes in the size of the direct effect. The indirect effect turns out to be small in all calibrations. Hence, neither does it strongly increase the direct effect nor overturn the direct effect to yield a negative aggregated effect.show moreshow less

Download full text files

Export metadata

Statistics

Number of document requests

Additional Services

Share in Twitter Search Google Scholar
Metadaten
Author:Claudia Fries
URN:urn:nbn:de:bvb:384-opus4-30310
Frontdoor URLhttps://opus.bibliothek.uni-augsburg.de/opus4/3031
Advisor:Alfred Maußner
Type:Doctoral Thesis
Language:English
Publishing Institution:Universität Augsburg
Granting Institution:Universität Augsburg, Wirtschaftswissenschaftliche Fakultät
Date of final exam:2014/12/03
Release Date:2015/04/14
GND-Keyword:Internationaler Konjunkturzusammenhang; Direktinvestition; Arbeitsmarkt; Reform
Institutes:Wirtschaftswissenschaftliche Fakultät
Wirtschaftswissenschaftliche Fakultät / Institut für Volkswirtschaftslehre
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):Deutsches Urheberrecht