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For immediate release: December 1, 2008

Globalization May Delay Impact of U.S. Business Cycles on Other Economies, Says Dallas Fed

DALLAS—Globalization may have reduced the United States' immediate impact on other economies, but the U.S. continues to exert strong longer-term influence over business cycles worldwide, according to the latest issue of the Federal Reserve Bank of Dallas' Economic Letter.

In "Globalization and the Changing Nature of the U.S. Economy's Influence in the World," economist Adriana Z. Fernandez and University of Memphis assistant professor Alex Nikolsko-Rzhevskyy say global economic integration may have made other countries more dependent on each other and weakened their initial responses to U.S. economic fluctuations.

Analysis of key nations' business cycles finds the cumulative impact of U.S. output shocks grows over time, according to the authors. U.S. economic spillovers, on average, are larger, more delayed and less predictable than in previous decades.

"No longer do other countries catch a cold the moment the U.S. sneezes," the authors write. "They do catch a cold, but the onset is much slower and the effect is longer lasting."


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