Marge extensive du commerce et synchronisation des cycles

This paper shows that an increase in trade integration has mixed effects on business cycle synchronization. In a two country dsge model with flexible prices we show that an increase in the extensive margin of trade reduces the coupling of business cycles with regard to a trade increase affecting only the intensive margin. This phenomenon comes from a dampening in the terms of trade adjustment. Empirically we find that, for a group of ten European countries between 1995 and 2007, an increase of 1% in the extensive margin of bilateral trade has reduced business cycle synchronization by something between 0.11 % and 0.34 % depending on the choice of control variables and the definition of the extensive margin of trade. Classification JEL : F4, F44, F15