The Research On International Transmission Channel Of Economic Shocks In The Disaster Event

The terrorist attack in September 11 brought human society into a new era inwhich disaster events appear in high frequency. As one of the globalization effects, theeconomic shocks made by disaster events are often cross-boarders. Thus, it isimportant to study the international transmission channels of economic shocks madeby disaster events for both investment risk prevention and assessment.In view of various disaster events have various characters, this paper selectterrorist attack of September 11, SARS and hurricane Katrina as typical examples toanalyze how economic shock made by disaster event affects the world economy. Weconclude that international industry linkage, international trade, international finance, confidence as the main international transmission channel of economic shocks madeby disaster events. We also find that the major parts of the economic shocks made bydisaster events are aggregate demand shocks.In order to study the role of various channels in transmitting the economic shocks, we set up econometric models in which we select China, USA and Japan etc. 22countries as the sample. Given the difference of transmission channels betweenaggregate demand shocks and aggregate supply shocks, we use the 'Long-runrecursive identification' to identify aggregate demand shocks and supply shocks fromthe economic fluctuations in the 22 counties. Then we calculate the aggregate demandshocks correlation and aggregate supply shocks correlation between each twocountries. We also calculate direct trade index, trade competition index and fundscompetition index between each two countries.At last, we decompose shocks correlations into direct trade index, tradecompetition index and funds competition index. We find from the estimation thatdirect trade, trade competition and funds competition are more important in thetransmission of aggregate demand shocks than aggregate supply shocks. We also finddirect trade and funds competition play more important role in aggregate demandshocks correlation relative to trade competition.