WORLD ECONOMIC OUTLOOK: GROWTH SLOWDOWN, PRECARIOUS RECOVERY Macroeconomic Implications of Shocks to the Price of Capital Goods Summary and Policy Implications Box 3. 1. The Price of Manufactured Low-Carbon Energy Technologies Box 3. 2. Evidence from Big Data: Capital Goods Prices across Countries Box 3.3. On the Underlying Source of Changes in Capital Goods Prices: A Model-Based Analysis Box 3. 4. Capital Goods Tariffs and Investment: Firm-Level Evidence from Colombia 935%80 References Online Annexes Annex 3. 1. Data Sources and Annex 3. 2. Supplementary Stylized Facts Annex 3.3. Using Trade Data to Uncover Differences in Capital Goods Prices across Countries Annex 3.4. Drivers of Relative Investment Prices: Across Countries Annex 3.5. Drivers of Relative Investment Prices: Over Time Annex 3.6. Empirical Evidence on the Impact of Relative Investment Prices on Investment Rates at the Country Level Annex 3.7. Empirical Evidence on the Impact of relative Investment Prices on Investment Rates at the Sector Leve Chapter 4. The Drivers of Bilateral Trade and the Spillovers from Tariffs Introduction Stylized Facts 105 Determinants of bilateral trade balances The role of macroeconomic factors A Closer Look at Tariffs and Their Spillovers usion 119 Box 4.1. Gross versus value-Added Trade Box 4.2. Bilateral and Aggregate Trade Balances Box 4.3. Understanding Trade Deficit Adjustments: Does Bilateral Trade Play a Special Role? 123 Box 4.4. The Global Macro and Micro Effects of a US-China Trade Dispute: Insights from Three models Online Annexes Annex 4. 1. Gravity Model, Data, and Estimation Annex 4.2. Derivation of Relation between Bilateral and Aggregate Trade Balances Annex 4.3. Tariff Spillovers: Technical and Data Appendices Statistical Appendi 131 What's new Data and Conventions Classification of countries eneral Features and Composition of Groups in the World Economic Outlook Classification Table A. Classification by Word Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2018 Table B. Advanced Economies by Subgroup Table C. European Union 136 Table D. Emerging Market and Developing Economies by Region and Main Source of Ext International Monetary Fund April 2019WORLD ECONOMIC OUTLOOK: GROWTH SLOWDOWN, PRECARIOUS RECOVERY iv International Monetary Fund | April 2019 Macroeconomic Implications of Shocks to the Price of Capital Goods 88 Summary and Policy Implications 91 Box 3.1. The Price of Manufactured Low-Carbon Energy Technologies 93 Box 3.2. Evidence from Big Data: Capital Goods Prices across Countries 95 Box 3.3. On the Underlying Source of Changes in Capital Goods Prices: A Model-Based Analysis 96 Box 3.4. Capital Goods Tariffs and Investment: Firm-Level Evidence from Colombia 98 References 100 Online Annexes Annex 3.1. Data Sources and Country Groupings Annex 3.2. Supplementary Stylized Facts Annex 3.3. Using Trade Data to Uncover Differences in Capital Goods Prices across Countries Annex 3.4. Drivers of Relative Investment Prices: Across Countries Annex 3.5. Drivers of Relative Investment Prices: Over Time Annex 3.6. Empirical Evidence on the Impact of Relative Investment Prices on Investment Rates at the Country Level Annex 3.7. Empirical Evidence on the Impact of Relative Investment Prices on Investment Rates at the Sector Level Chapter 4. The Drivers of Bilateral Trade and the Spillovers from Tariffs 103 Introduction 103 Stylized Facts 105 Determinants of Bilateral Trade Balances 109 The Role of Macroeconomic Factors 113 A Closer Look at Tariffs and Their Spillovers 115 Conclusion 119 Box 4.1. Gross versus Value-Added Trade 120 Box 4.2. Bilateral and Aggregate Trade Balances 122 Box 4.3. Understanding Trade Deficit Adjustments: Does Bilateral Trade Play a Special Role? 123 Box 4.4. The Global Macro and Micro Effects of a US–China Trade Dispute: Insights from Three Models 124 References 128 Online Annexes Annex 4.1. Gravity Model, Data, and Estimation Annex 4.2. Derivation of Relation between Bilateral and Aggregate Trade Balances Annex 4.3. Tariff Spillovers: Technical and Data Appendices Statistical Appendix 131 Assumptions 131 What’s New 132 Data and Conventions 132 Country Notes 133 Classification of Countries 133 General Features and Composition of Groups in the World Economic Outlook Classification 134 Table A. Classification by World Economic Outlook Groups and Their Shares in Aggregate GDP, Exports of Goods and Services, and Population, 2018 135 Table B. Advanced Economies by Subgroup 136 Table C. European Union 136 Table D. Emerging Market and Developing Economies by Region and Main Source of Export Earnings 137