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The global role of the US economy: Linkages, policies and spillovers

Vol: 
CAMA Working Paper 13/2017
Author name: 
M. Ayhan Kose
Csilla Lakatos
Franziska Ohnsorge
Marc Stocker
Year: 
2017
Month: 
February
Abstract: 

This paper analyzes the role of the United States in the global economy and examines the extent of global spillovers from changes in U.S. growth, monetary and fiscal policies, and uncertainty in its financial markets and economic policies. Developments in the U.S. economy, the world’s largest, have effects far beyond its shores. A surge in U.S. growth could provide a significant boost to the global economy. Tightening U.S. financial conditions-whether due to contractionary U.S. monetary policy or other reasons-could reverberate across global financial markets, with adverse effects on some emerging market and developing economies that rely heavily on external financing. In addition, lingering uncertainty about the course of U.S. economic policy could have an appreciably negative effect on global growth prospects. While the United States plays a critical role in the world economy, activity in the rest of the world is also important for the United States.

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