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Business Cycles Synchronicity and Income Levels: Has Globalisation Brought us Closer Than Ever?

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  • Rosmy Jean Louis
  • Daniel Simons

Abstract

type="main" xml:id="twec12074-abs-0001"> Research on business cycle linkages shows a tendency to model countries of relatively the same income levels jointly. However, the issue of whether these countries move along the same business cycles has not been formally investigated in the literature. In this paper, we take this approach and investigate whether each group of countries follows its own dynamics and is therefore subjected to the same business cycle and whether these cycles are independent of each other across income groups. Results indicate that high income per capita countries (HICs) tend to be guided by stronger similarity in business cycles than countries in the middle (MICs) and low income (LICs) groups. In search for an explanation of the business cycles synchronicity observed, panel data analysis was explored. The results from the robust fixed effects estimation show neither trade openness nor shocks to consumption underlie international business cycle synchronization, but rather shocks to oil prices.

Suggested Citation

  • Rosmy Jean Louis & Daniel Simons, 2014. "Business Cycles Synchronicity and Income Levels: Has Globalisation Brought us Closer Than Ever?," The World Economy, Wiley Blackwell, vol. 37(5), pages 592-624, May.
    • Handle: RePEc:bla:worlde:v:37:y:2014:i:5:p:592-624
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    File URL: http://hdl.handle.net/10.1111/twec.2014.37.issue-5
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    Cited by:

    1. Igor Velickovski & Aleksandar Stojkov & Ivana Rajkovic, 2017. "DIS Union of the Core and the Periphery," International Journal of Economics and Financial Issues, Econjournals, vol. 7(6), pages 159-174.
    2. Kinfack, Emilie & Bonga-Bonga, Lumengo, 2020. "Trade Linkages and Business Cycle Co-movement: Analysis of Trade between African Economies and their Main Trading partners," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 73(2), pages 275-306.
    3. Shen, Jiancheng & Selover, David D. & Li, Chao & Yousefi, Hamed, 2022. "An ocean apart? The effects of US business cycles on Chinese business cycles," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 677-698.

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