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Winkelmann, R., Straubhaar, T., Scheide, J. (Eds.) (2003). Globalisation: the End of National Economic Policy?. New Forms of International Business Cycle Linkages. Duncker & Humblot. https://doi.org/10.3790/978-3-428-51303-1
Winkelmann, Rainer; Straubhaar, Thomas and Scheide, Joachim. Globalisation: the End of National Economic Policy?: New Forms of International Business Cycle Linkages. Duncker & Humblot, 2003. Book. https://doi.org/10.3790/978-3-428-51303-1
Winkelmann, R, Straubhaar, T, Scheide, J (eds.) (2003): Globalisation: the End of National Economic Policy?: New Forms of International Business Cycle Linkages, Duncker & Humblot, [online] https://doi.org/10.3790/978-3-428-51303-1

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Globalisation: the End of National Economic Policy?

New Forms of International Business Cycle Linkages

Editors: Winkelmann, Rainer | Straubhaar, Thomas | Scheide, Joachim

Applied Economics Quarterly. Supplements, Vol. 54

(2003)

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Abstract

In recent years, the integration of goods, capital and financial markets has progressed on a global scale. The 66th annual meeting of the Association of German Economics Research Institutes (ARGE) focused on the question of national macroeconomic policies in an environment of increasingly interdependent business cycles.

In the first paper of the volume, Koll gives a general introduction to the history of business cycles co-movement. Koll also highlights the responsibility of national governments as global players.

The first section deals with the evolution of business cycle synchronization. Flaig, Sturm and Woitek conclude that, while the oil shocks of the 70s induced strong co-movements in business cycles, German unification led to a divergence of national cycles. The paper by Fichtner concentrates not only on business cycle synchronization over time but introduces an analysis on the transmission mechanisms at work. Fichtner finds that common shocks and technology spillovers account for most of the co-movement in output.

The second section explains some of the individual transmission mechanisms in greater detail. Horn examines how business confidence carries over from one country to another and finds evidence that positive expectations in the US strengthen German confidence and that this relationship has become stronger over time. Schröder quantifies the role of the transmission of stock market investors' confidence in the relationship between US and German GDP. He distinguishes between the pure investor expectation effect and the direct influence of stock markets on real GDP and finds a direct causal impact.

The third section concentrates on economic policy and its implications. Kuhn analyzes the transmission of monetary policy shocks and finds the transmission mechanism via interest rate co-movements to be more important than that via trade and the exchange rate mechanism. Middendorf and Radmacher-Nottelmann explore the importance of multinationals in the transmission of economic business cycles. Macro evidence suggests a synchronization of investment behavior. Micro evidence, however, reveals only a weak impact of multinationals on business cycle synchronization.

This AEQ supplement should be essential reading for anyone, whether academic or practitioner, with an interest in future macroeconomic policy options in an increasingly integrated economic environment.

Table of Contents

Section Title Page Action Price
Contents 7
Willi Koll: Economic Policy in the Light of New Forms of International Business-Cycle Convergence 9
1. Business-Cycle Convergence from the Perspective of Economic Policy 9
2. New Transmission Mechanisms 11
2.1 Foreign Trade: a Factor of Continued Importance 12
2.2 International Direct Investment and Corporate Integration have Gained Considerable Importance in Recent Years 13
2.3 Changes in the Mood of Consumers and Investors are Directly Transmitted 15
2.4 The Growing Together of Financial Markets Synchronizes Economic Trends 15
Conclusions 18
3. Political Conclusions 18
3.1 National Economic Policy: Increasing the German Economy's Resilience in the Face of \"external Shocks 18
3.2 Thinking and Acting European 19
3.3 Intensifying International Co-operation 19
Gebhard Flaig / Jan-Egbert Sturm / Ulrich Woitek: International Synchronization of National Business Cycles? 21
Abstract 21
1. Introduction 21
2. Data 23
2.1 Correlation Coefficients 24
3. Synchronization of Business Cycles in the Time Domain 26
3.1 The Econometric Model 26
3.2 Empirical Results 28
4. Synchronization of Business Cycles in Frequency Domain 32
5. Concluding Remarks 38
References 38
Manfred J. M. Neumann: International Synchronization of National Business Cycles? A comment 41
References 46
Ferdinand Fichtner: Germany and the European Business Cycle – An Analysis of Causal Relations in an International Real Business Cycle Model 47
Abstract 47
1. Introduction 47
2. Empirical Regularities of the European Business Cycle 49
3. The Model 53
4. The Steady State 55
5. Calibration 56
6. Synopsis of the Computational Procedure 57
7. Simulation of Impulse Response Functions 58
8. Implications and Discussion of Results 66
9. Conclusion and Final Remarks 68
Appendix 69
References 70
Bernd Lucke: Germany and the European Business Cycle – An Analysis of Causal Relations in an International Real Business Cycle Model. A Comment 73
Gustav Adolf Horn: US Outlook and German Confidence Does the Confidence Channel Work? 77
Abstract 77
1. Introduction 77
2. Data 79
3. Granger Tests 82
4. Estimation Results 86
5. Asymmetric Effects 89
6. Conclusion 93
References 93
Appendix 94
Christian Dreger: US Outlook and German Confidence – Does the Confidence Channel Work? A Comment 95
References 98
Michael Schröder: Interactions between U.S. and German GDP: The Role of Stock Markets 99
Abstract 99
1. Introduction 99
2. The Data 102
3. The Econometric Models 104
4. Results 108
5. Conclusions 115
References 116
Horst Entorf: Interactions between U.S. and German GDP: The Role of Stock Markets. A Comment 119
References 124
Annette Kuhn: The International Transmission of Monetary Policy Shocks: Evidence for Selected OECD Countries 125
Abstract 125
1. Introduction 125
2. Theoretical Background 126
3. Empirical Analysis 130
3.1 The Econometric Model 130
3.2 Empirical Results 132
4. Conclusion 139
References 140
Volker Clausen: The International Transmission of Monetary Policy Shocks: Evidence for Selected OECD Countries. A Comment 143
1. Theoretical background 144
2. Criticism of the VAR Methodology 145
References 147
Torge Middendorf / Nils A. Radmacher-Nottelmann: Business Cycle Transmission and MNE Activity – Macroeconomic Patterns and Microeconomic Evidence 149
Abstract 149
1. Introduction 149
2. The Role of MNEs in the Transmission of Business Cycles 150
3. Empirical Investigation of a Greater Synchronization of Business Cycles at the Macro Level 151
3.1 Data Description 151
3.2 Indication of a Greater Synchronization of Investment Cycles from Macro Data 152
4. Impact of MNEs on the Synchronization of Business Cycles from Micro-Level 154
4.1 Specification of the Investment Function 154
Data Source 154
4.2. Description of Data 156
4.3. Results 158
5. Concluding Remarks 160
Appendix 161
References 165
Andre Jungmittag: Business Cycle Transmission and MNE Activity – Macroeconomic Patterns and Microeconomic Evidence. A Comment 167
1. International Rent Sharing as a Further Transmission Channel 167
2. Remarks Concerning the Empirical Analysis at the Macro Level 168
3. Remarks Concerning the Empirical Analysis at the Micro Level 169
Summary 170
References 171
Abstracts in German 173
Willi Koll: Wirtschaftspolitik im Zeichen neuer Formen des internationalen Konjunkturverbundes 173
Gebhard Flaig / Jan-Egbert Sturm / Ulrich Woitek: Internationale Synchronisation der nationalen Konjunkturzyklen? 173
Ferdinand Fichtner: Deutschland und der Europäische Konjunkturverbund – Analyse möglicher Kausalbeziehungen in einem Modell des internationalen Konjunkturzyklus 174
Gustav-Adolf Horn: US Outlook und deutsche Geschäftsaussichten – wirkt das Vertrauen der Marktteilnehmer als Konjunktur-Koppelung? 174
Michael Schröder: Wechselwirkungen zwischen dem US-amerikanischen und dem deutschen Bruttoinlandsprodukt – Die Rolle der Aktienbörsen 175
Annette Kuhn: Zur internationalen Übertragung monetärer Impulse 175
Torge Middendorf / Nils A. Radmacher-Nottelmann: Konjunkturübertragung durch Multinationale Unternehmen – Makroökonomische Evidenz und mikroökonomische Fundierung 176
Participants 177