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Measuring the world economy

Badinger, Harald (2013) Measuring the world economy. The World Economy, 36 (1). pp. 12-30. ISSN 1467-9701

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Abstract

This paper provides an empirical assessment of whether the world economy has become smaller in terms of economic distance over the last decades. We adopt a cross-sectional spatial econometric approach, relating domestic output volatility to (distance-weighted averages of) other countries' output volatility, using a sample of 135 countries and rolling 10-year time windows over the period 1955 to 2006. Using descriptive measures, test statistics, and spatial econometric estimates, we find that cross-country interdependence was virtually insignificant in the early post-war period but has increased strongly from the mid-1960s to the mid-1980s and remained at a high level since then. Results for the most recent period suggest that common shocks to output volatility have a magnified impact and roughly quadruplicate through international spillover effects, which are transmitted through both trade and financial openness.

Item Type: Article
Additional Information: To see the final version of this paper please visit the publisher's website. Access to the published version requires a subscription. This is the peer reviewed version of the following article, which has been published in final form at http://dx.doi.org/10.1111/twec.12022. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Keywords: financial openness, spillovers, trade, output volatility
Classification Codes: JEL C21, E32, F15, F40
Divisions: Departments > Volkswirtschaft > Internationale Wirtschaft
Forschungsinstitute > Europafragen
Version of the Document: Accepted for Publication
Depositing User: Gertraud Novotny
Date Deposited: 15 Mar 2017 16:26
Last Modified: 15 Mar 2017 17:32
Related URLs:
FIDES Link: https://bach.wu.ac.at/d/research/results/61300/
URI: http://epub.wu.ac.at/id/eprint/5471

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