Are global spillovers complementary or competitive? Need for international policy coordination

Abstract Advanced and emerging economies are becoming more interdependent with rapid pace of globalization capital markets technological innovations in recent years. We examine whether technology monetary policy shocks get transmitted between advanced market to what extent they generate complementary or competitive effects. Given the globally integrated nature markets, we uncover a transmission mechanism by which countries spill over them through flow channel. mainly investigate analysis from SVAR model econometricians provides empirically similar conclusions those macroeconomic theory-based DSGE measuring impact demand-side shocks. fit our VAR models same time series data used calibrate estimate model. conclude that fiscal US (advanced economy) India (emerging market), while domestic global exchange rate have Intuitively, enhances productivity both countries, tend drive country higher return. Thus could unintended effects terms inflows hence greater coordination policies can help limit adverse cross-border spillovers.