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The Global Impact of the Systemic Economies and MENA Business Cycles

Mr. Paul Cashin, Mr. Mehdi Raissi, Mr. Kamiar Mohaddes

2012

Overview

This paper analyzes spillovers from macroeconomic shocks in systemic economies (China, the Euro Area, and the United States) to the Middle East and North Africa (MENA) region as well as outward spillovers from a GDP shock in the Gulf Cooperation Council (GCC) countries and MENA oil exporters to the rest of the world. This analysis is based on a Global Vector Autoregression (GVAR) model, estimated for 38 countries/regions over the period 1979Q2 to 2011Q2. Spillovers are transmitted across economies via trade, financial, and commodity price linkages. The results show that the MENA countries are more sensitive to developments in China than to shocks in the Euro Area or the United States, in line with the direction of evolving trade patterns and the emergence of China as a key driver of the global economy. Outward spillovers from the GCC region and MENA oil exporters are likely to be stronger in their immediate geographical proximity, but also have global implications.

• Publisher: INTERNATIONAL MONETARY FUND,International Monetary Fund
• Subject: Africa, North / Business cycles / China / Econometric models / Europe / Middle East / Spillovers ;Middle East ;North Africa ;China ;Europe ;United States ;External shocks ;Business cycles ;Economic models ;Global VAR (GVAR) ;interconnectedness ;global macroeconomic modeling ;impulse responses ;macroeconomic shocks ;international business cycle. ;oil exporters;exporters;oil prices;oil exports;reer;real effective exchange rate;world economy;commodity exporters;trading partners;trading partner;commodity exports;oil exporter;export share;trade flows;merchandise exports;bilateral trade;commodity prices;petroleum exporting countries;transmission of shocks;oil importers;trade patterns;exporting countries;open capital accounts;aggregate demand;crude oil exports;trade share;international trade;export revenues;exporter;changes in trade;oil export revenues;market for exports;trade performance;fuel exports;oil export;output elasticity;economic integration;trade relationships;global export;increasing trade;commodity export;monetary union;average trade;oil revenues;regional trade;global growth prospects;open economies;capital accounts;trade pattern / United Stated
• ISBN: 1475551916, 1475596669, 9781475596663, 9781475551914, 1475581645, 9781475581645