The IMF Country Reports Series covers economic and financial developments and trends in member countries. Each report, prepared by a staff team after discussions with officials of the country, is published at the option of the member.
The size and sources of international spillovers of activity remain subject to significant uncertainty. This Selected Issues paper uses a new approach to differentiating these effects using disturbances to a diverse group of small industrial countries as a proxy for global shocks. The results from the baseline vector autoregressions suggest that shocks to the United States are significant for foreign activity. The paper also evaluates alternative explanations for the easy financing of the U.S. current account deficit in recent years.