Trade and Business Cycle Synchronization in OECD Countries - a Re-examination
AbstractThis paper re-examines the relationship between trade intensity and business cycle synchronization for 21 OECD countries during 1970-2003. Instead of using instrumental variables, we estimate a multivariate model including variables capturing specialisation, financial integration, and similarity of economic policies. We confirm that trade intensity affects business cycle synchronization, but the effect is much smaller than previously reported. Other factors in our model have a similar impact on business cycle synchronization as trade intensity. Finally, we find that the effect of trade on business cycle synchronisation is not driven by outliers and does not suffer from parameter heterogeneity.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1546.
Date of creation: 2005
Date of revision:
business cycles; trade; synchronization of business cycles;
Other versions of this item:
- Inklaar, Robert & Jong-A-Pin, Richard & de Haan, Jakob, 2008. "Trade and business cycle synchronization in OECD countries--A re-examination," European Economic Review, Elsevier, vol. 52(4), pages 646-666, May.
- NEP-ALL-2005-10-04 (All new papers)
- NEP-CWA-2005-10-04 (Central & Western Asia)
- NEP-INT-2005-10-04 (International Trade)
- NEP-MAC-2005-10-04 (Macroeconomics)
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