Abstract:
Economic performance increasingly relies on global economic environment due to the growing importance of trade and financial links among countries. This work aims to analyze the possible effects of a potential economic growth downturn or one large negative shock in China, Germany and United States on the growth of other economies. We use a univariate Global autoregressive approach to assess interdependence across 38 countries. We simulate two types of phenomena. The first one is a one time large shock of -2.5 standard deviations. The second experiment simulates the effect of a hypothetical downturn of the aforementioned economies. Our results suggest that the United States play the role of a global economy affecting countries all over the globe whereas Germany and China play an important regional role.
