Shock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade.

Examining the spread of macroeconomic phenomena between countries has become increasingly popular after the 2008 economic crisis, but the recent COVID-19 pandemic rendered this issue much more relevant as it shed more light on the risks arising from strongly interconnected economies. This paper inte...

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Autores principales:	Zita Iloskics, Tamás Sebestyén, Erik Braun
Formato:	article
Lenguaje:	EN
Publicado:	Public Library of Science (PLoS) 2021
Materias:	Medicine R Science Q
Acceso en línea:	https://doaj.org/article/2ba5e172db4441b7a9bc6c717208633f
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spelling	oai:doaj.org-article:2ba5e172db4441b7a9bc6c717208633f2021-12-02T20:07:50ZShock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade.1932-620310.1371/journal.pone.0258309https://doaj.org/article/2ba5e172db4441b7a9bc6c717208633f2021-01-01T00:00:00Zhttps://doi.org/10.1371/journal.pone.0258309https://doaj.org/toc/1932-6203Examining the spread of macroeconomic phenomena between countries has become increasingly popular after the 2008 economic crisis, but the recent COVID-19 pandemic rendered this issue much more relevant as it shed more light on the risks arising from strongly interconnected economies. This paper intends to extend previous studies in this line by examining the relationship between trade openness and business cycle synchronization. It extends the scope of previous analyses in three areas. First, we use a Granger-causality approach to identify synchronization. Second, trade is broken down to the sector level and third, we distinguish between upstream and downstream connections. These developments allow for a directed approach in the analysis. We use conditional logit regressions to estimate the effect of trade openness on the probability of shock-transmission. The results presented in this study contribute to the literature in two ways. First, in addition to revealing a positive effect of aggregate two-way trade on shock-contagion, it also points out that this overall effect hides diverse behavior in specific trading sectors as well as upstream and downstream channels. Second, while some sectors are not significant channels of shock-transmission in either directions, upstream channels seem to be important in agriculture while downstream channels dominate machinery and other manufactures. Also, there are sectors (chemicals and related products) trade in which affects shock-transmission negatively.Zita IloskicsTamás SebestyénErik BraunPublic Library of Science (PLoS)articleMedicineRScienceQENPLoS ONE, Vol 16, Iss 10, p e0258309 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Medicine R Science Q
spellingShingle	Medicine R Science Q Zita Iloskics Tamás Sebestyén Erik Braun Shock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade.
description	Examining the spread of macroeconomic phenomena between countries has become increasingly popular after the 2008 economic crisis, but the recent COVID-19 pandemic rendered this issue much more relevant as it shed more light on the risks arising from strongly interconnected economies. This paper intends to extend previous studies in this line by examining the relationship between trade openness and business cycle synchronization. It extends the scope of previous analyses in three areas. First, we use a Granger-causality approach to identify synchronization. Second, trade is broken down to the sector level and third, we distinguish between upstream and downstream connections. These developments allow for a directed approach in the analysis. We use conditional logit regressions to estimate the effect of trade openness on the probability of shock-transmission. The results presented in this study contribute to the literature in two ways. First, in addition to revealing a positive effect of aggregate two-way trade on shock-contagion, it also points out that this overall effect hides diverse behavior in specific trading sectors as well as upstream and downstream channels. Second, while some sectors are not significant channels of shock-transmission in either directions, upstream channels seem to be important in agriculture while downstream channels dominate machinery and other manufactures. Also, there are sectors (chemicals and related products) trade in which affects shock-transmission negatively.
format	article
author	Zita Iloskics Tamás Sebestyén Erik Braun
author_facet	Zita Iloskics Tamás Sebestyén Erik Braun
author_sort	Zita Iloskics
title	Shock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade.
title_short	Shock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade.
title_full	Shock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade.
title_fullStr	Shock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade.
title_full_unstemmed	Shock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade.
title_sort	shock propagation channels behind the global economic contagion network. the role of economic sectors and the direction of trade.
publisher	Public Library of Science (PLoS)
publishDate	2021
url	https://doaj.org/article/2ba5e172db4441b7a9bc6c717208633f
work_keys_str_mv	AT zitailoskics shockpropagationchannelsbehindtheglobaleconomiccontagionnetworktheroleofeconomicsectorsandthedirectionoftrade AT tamassebestyen shockpropagationchannelsbehindtheglobaleconomiccontagionnetworktheroleofeconomicsectorsandthedirectionoftrade AT erikbraun shockpropagationchannelsbehindtheglobaleconomiccontagionnetworktheroleofeconomicsectorsandthedirectionoftrade
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Shock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade.

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