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US macroeconomic shocks and international business cycle

Author

Listed:
  • Grzegorz Wesołowski

    (University of Warsaw, Faculty of Economic Sciences)

  • Oleg Gurshev

    (University of Warsaw, Faculty of Economic Sciences)

Abstract

This paper demonstrates that key macroeconomic shocks originating in the United States contribute significantly to business cycle synchronization between the US and other economies. These shocks also account for a substantial part of output fluctuations in these economies. Using panel local projection regressions with small sample refinements, we find that six major US shocks explain 21% - 28% of the forecast error variance in the GDP of open economies over a three-year horizon. Considering individual shock contributions, we document that technology and monetary policy innovations are of the highest relevance.

Suggested Citation

  • Grzegorz Wesołowski & Oleg Gurshev, 2025. "US macroeconomic shocks and international business cycle," Working Papers 2025-06, Faculty of Economic Sciences, University of Warsaw.
    • Handle: RePEc:war:wpaper:2025-06
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    File URL: https://www.wne.uw.edu.pl/download_file/5306/0
    File Function: First version, 2025
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    More about this item

    Keywords

    Macroeconomic shocks; International spillovers; International business cycles; Technology shocks; Monetary policy; Financial shocks; Fiscal policy; Investment shocks;
    All these keywords.

    JEL classification:

    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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