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Trade and business cycle synchronization in OECD countries--A re-examination

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Author Info
Inklaar, Robert
Jong-A-Pin, Richard
de Haan, Jakob

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Abstract

This paper re-examines the relationship between trade intensity and business cycle synchronization for 21 OECD countries in the period 1970-2003. Instead of using instrumental variables, we estimate a multivariate model including variables capturing specialization and similarity of economic policies. We confirm that trade intensity affects synchronization, but the effect is much smaller than previously reported. Other factors, like specialization and convergence in monetary and fiscal policies, have a similar impact on business cycle synchronization as trade intensity. The effect of trade on synchronization is not driven by outliers. However, the impact of trade on synchronization is not robust across deciles.

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Publisher Info
Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 52 (2008)
Issue (Month): 4 (May)
Pages: 646-666
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Handle: RePEc:eee:eecrev:v:52:y:2008:i:4:p:646-666

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  4. César Calderón & Alberto Chong & Ernesto Stein, 2002. "Trade Intensity and Business Cycle Synchronization: Are Developing Countries Any Different?," Working Papers Central Bank of Chile 195, Central Bank of Chile. [Downloadable!]
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  18. Paul De Grauwe & Francesco Paolo Mongelli, 2005. "Endogeneities of optimum currency areas - what brings countries sharing a single currency closer together?," Working Paper Series 468, European Central Bank. [Downloadable!]
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  1. Axel Dreher & Martin Gassebner & Lars-H. R. Siemers, 2007. "Does Terror Threaten Human Rights? Evidence from Panel Data," Working papers 07-156, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
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  2. Mark Mink & Jan P.A.M. Jacobs & Jakob de Haan, 2007. "Measuring Synchronicity And Co-Movement Of Business Cycles With An Application To The Euro Area," CAMA Working Papers 2007-19, Australian National University, Centre for Applied Macroeconomic Analysis. [Downloadable!]
    Other versions:
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