The Impact of External Shocks on Small Open Economies: Evidence from East Asian Countries

Thi Lien Hoa Nguyen, Thu Giang Tran, Thi Hong Minh Le

Abstract


In this paper, we investigate whether external shocks originating from the global economy as well as from the U.S. played an important role in macroeconomic fluctuations of East Asian countries during the period 2001-2012. We further check if these shocks lead to asymmetric or symmetric reactions between the considered countries. Using a structural VAR model for 7 East Asian countries, we find that oil prices and U.S. monetary shocks are more important to the variance of domestic variables than U.S. output shocks. Additionally, impulse responses of domestic variables are highly symmetric when these external shocks occur.

Full Text: PDF DOI: 10.5539/ijef.v6n2p206

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This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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