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We extend a classic macroeconomic framework guided by extensive empirical and theoretical literature on growth transmission channels and shock decomposition, with the purpose of measuring the growth spillovers from G-10 countries to the US.

We use a time-varying parameter vector autoregressive (TVP-VAR) model with dynamic structures to measure time-varying external spillover effects under different economic conditions, i.e. controlled by a representative set of American macroeconomic variables.

Based on our empirical exercise from 1996q3 to 2023q1, we emphasize the roles of France and Russia in the late 1990s as well as the G7 (excluding the US) and Eurozone countries following the pandemic. We also provide insights into the internal transmission channels.

We find that Germany, Japan and Italy only managed to have a net spillover effect on the US in one or two quarters in 1996 and 1997, while the influence of Canada, China, the UK and India appears to affect American growth between 1996 and 1999. The influences of France and Russia are stronger, as they can impact the American economy for more than 30 quarters. Regarding economic blocs, the G7 (excluding the US) and the Eurozone can impact the US during and after the pandemic.

Our results on internal pass-through show a relevant role played by the high levels of American debt and interest rates. This finding is relevant and worrying, and it is aligned with literature on the effects of high levels of public indebtedness and inflation after the pandemic, even in developing economies. In this context, according to empirical findings reported by Matos et al. (2024) based on conditional wavelet tools, most relationships between debt and GDP are given by anti-phasic leadership of the debt (0–4-year frequency period), while inflation can lead to growth in the opposite direction (0–8-year frequency period).

This evidence is significant as recent years have reshaped the understanding of power, with several states emerging as new powers. The role of economic blocs after the pandemic supports this viewpoint. To summarize, both the domestic macroeconomic scenario and the geopolitical forces pose challenges to the American economy.

Our work differs from previous related studies in two aspects. First, unlike most, we use the conditional connectedness approach outlined by Stenfors et al. (2022). Second, we extend a macroeconomic-based growth cycle model instead of a neoclassical approach.