Berge, Travis (2012): Has globalization increased the synchronicity of international business cycles? Published in: Economic Review No. Q3 (2012)
Download (367kB) | Preview
The past 30 years have been witness to an inexorable change in the degree to which economies are connected internationally. At the same time, the 2007-2008 recession was the first ‘global recession’ in decades. This article explores how international trade and cross-border holdings financial assets impact the synchronization of business cycles internationally. The paper begins by producing chronologies of business cycle turning points for a group of 32 major economies covering 40 years of history. With these chronologies in hand, we document the degree of bilateral business cycle synchronization, relating cross-country differences in synchronization to bilateral trade and financial linkages. The analysis confirms that countries with deep trade linkages tend to experience similar business cycle fluctuations. However, we find no such relationship for financial linkages.
|Item Type:||MPRA Paper|
|Original Title:||Has globalization increased the synchronicity of international business cycles?|
|Keywords:||Globalization; international business cycle synchronization|
|Subjects:||F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance|
|Depositing User:||Travis Berge|
|Date Deposited:||05. Nov 2012 15:53|
|Last Modified:||28. Apr 2015 23:37|
Anderson, J.E., and E. van Wincoop. 2003. “Gravity with gravitas: A solution to the border puzzle,” American Economic Review, vol. 93, no. 1, pp. 170-192.
Backus, D., P.J. Kehoe, and F.E. Kydland. 1992. “International real business cycles,” Journal of Political Economy, vol. 100, pp. 745-775. Barbieri,
Katherine and Omar Keshk. 2012. “Correlates of War Project Trade Data Set Codebook, Version 3.0.” Online: http://correlatesofwar.org.
Baxter, M., and M.A. Kouparitsas. 2005. “Determinants of business cycle co- movement: a robust analysis,” Journal of Monetary Economics, vol. 52, no. 1.
Bernanke, B. 2012. “Economic outlook and policy,” Speech before the Joint Eco- nomic Committee, U.S. Congress, Washington, D.C., June 7, 2012.
Bloom, N. 2009. “The impact of uncertainty shocks,” Econometrica, vol. 77, no. 3, pp. 623-685.
Bry, G., and C. Boschan. 1972. Cyclical analysis of time series: selected procedures and computer programs, NBER.
Claessens, S., A. Kose, and M.E. Terrones. 2011. “How do business and financial cycles interact?” CEPR Discussion Papers 8396, CEPR Discussion Papers.
Davig, T. and C. Hakkio. 2010. “What Is the Effect of Financial Stress on Eco- nomic Activity?” Federal Reserve Bank of Kansas City, Economic Review, vol. 95, no. 2, pp. 35-62.
Feenstra, R.C., and A.M. Taylor. 2008. International Economics, Worth Publishers.
Frankel, J. A., and A.K Rose. 1998. “The endogeneity of the optimum currency area criteria,” Economic Journal, 108(449), pp. 1009-25.
Harding, D., and A. Pagan. 2002. “Dissecting the cycle: a methodological investigation,” Journal of Monetary Economics, vol. 49, no. 2, pp. 365-381.
Heathcote, J., and F. Perri. 2004. “Financial globalization and real regionaliza- tion,” Journal of Economic Theory, vol. 119, no. 1, pp. 207-243.
Hummels, David, June Ishii and Kei-Mu Yi. 2001. “The nature and growth of vertical specialization in world trade,” Journal of International Economics, vol. 54, no. 1, pp. 75-96.
Imbs, J. 2004. “Trade, finance, specialization, and synchronization,” The Review of Economics and Statistics, vol. 86, no. 3, pp. 723-734..
Imbs, J. 2006. “The real effects of financial integration,” Journal of International Economics, vol. 68, no. 2, pp. 296-324.
Kollmann, R., Z. Enders, and G.J. Muller. 2011. “Global banking and inter- national business cycles,” European Economic Review, vol. 55, pp. 407-426.
Krugman, P. 2008. The international financial multiplier. Mimeo.
Lane, P.R., and G.M. Milesi-Ferretti. 2007. “The external wealth of nations mark ii: Revised and extended estimates of foreign assets and liabilities, 1970-2004,” Journal of International Economics, vol. 73, pp 223-250.
Mian and Sufi. 2010. “The Great Recession: lessons from microeconomic data,” American Economic Review, vol. 100, no. 2, pp. 1-10.
National Bureau of Economic Research. 2008. “Determination of the December 2007 peak in economic activity. Press release.
Rose, A.K., and C. Engel, C. 2002. “Currency unions and international integra- tion,” Journal of Money, Credit. and Banking, vol. 34, no. 4, pp. 1067-89.
Stock, J.H., and M.W. Watson. 2012. “Disentangling the channels of the 2007- 2009 recession,” Prepared for the Brookings Panel on Economic Activity, March 22-23, 2012.