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China in the World Economy: Dynamic Correlation Analysis of Business Cycles

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  • Jarko Fidrmuc
  • Iikka Korhonen
  • Ivana Bátorová

Abstract

We analyze globalization and business cycles in China and selected OECD countries using dynamic correlation analysis. We show that dynamic correlations of business cycles of OECD countries and China are low at business-cycle frequencies and positive for short-run developments. Furthermore, trade of OECD countries and China lowers the degree of business-cycle synchronization within the OECD area, especially at business-cycle frequencies. Thus, different degrees of participation in globalization can explain the differences between the business cycles of OECD countries. (JEL codes: E32, F15, F41) Copyright The Authors 2012. Published by Oxford University Press on behalf of Ifo Institute, Munich. All rights reserved. For permissions, please email: journals.permissions@oup.com, Oxford University Press.

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Article provided by CESifo in its journal CESifo Economic Studies.

Volume (Year): 59 (2013)
Issue (Month): 2 (June)
Pages: 392-411

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Handle: RePEc:oup:cesifo:v:59:y:2013:i:2:p:392-411

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Cited by:
  1. Andrew Hughes Hallett & Christian Richter, 2011. "Trans-Pacific Economic Relations and US-China Business Cycles : Convergence within Asia versus US Economic Leadership," Governance Working Papers 23244, East Asian Bureau of Economic Research.
  2. Jayaram, Shruthi & Patnaik, Ila & Shah, Ajay, 2009. "Examining the decoupling hypothesis for India," Working Papers 09/61, National Institute of Public Finance and Policy.
  3. Pomenková, Jitka & Fidrmuc, Jarko & Korhonen, Iikka, 2014. "China and the World economy: Wavelet spectrum analysis of business cycles," BOFIT Discussion Papers 5/2014, Bank of Finland, Institute for Economies in Transition.
  4. Korhonen, Iikka & Fidrmuc , Jarko, 2009. "The impact of the global financial crisis on business cycles in Asian emerging economies," BOFIT Discussion Papers 11/2009, Bank of Finland, Institute for Economies in Transition.
  5. Dreger, Christian & Zhang, Yanqun, 2014. "Does the economic integration of China affect growth and inflation in industrial countries?," Economic Modelling, Elsevier, vol. 38(C), pages 184-189.
  6. M. J. Herrerias & Javier Ordoñez, 2011. "If the Unites States sneezes, does the world need paracetamol?," Working Papers 2011/03, Economics Department, Universitat Jaume I, Castellón (Spain).
  7. Feldkircher, Martin & Korhonen, Iikka, 2012. "The rise of China and its implications for emerging markets - Evidence from a GVAR model," BOFIT Discussion Papers 20/2012, Bank of Finland, Institute for Economies in Transition.
  8. Christian Dreger & Yanqun Zhang, 2011. "The Chinese Impact on GDP Growth and Inflation in the Industrial Countries," Discussion Papers of DIW Berlin 1151, DIW Berlin, German Institute for Economic Research.
  9. Andrew Hughes Hallett & Christian Richter, 2009. "Is the US no longer the economy of first resort? Changing economic relationships in the Asia-Pacific region," International Economics and Economic Policy, Springer, vol. 6(2), pages 207-234, July.
  10. Zuzana Kucerova & Jitka Pomenkova, 2014. "Financial and Trade Integration of Selected EU Regions: Dynamic Correlation and Wavelet Approach," MENDELU Working Papers in Business and Economics 2014-45, Mendel University in Brno, Faculty of Business and Economics.

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