Advanced Search
MyIDEAS: Login to save this paper or follow this series

The few leading the many: foreign affiliates and business cycle comovement

Contents:

Author Info

  • Jörn Kleinert
  • Julien Martin
  • Farid Toubal

Abstract

This paper uses microdata on balance sheets, trade, and the nationality of ownership of firms in France to investigate the effect of foreign multinationals on business cycle comovement. We first show that foreign affiliates, which represent a tiny fraction of all firms, are responsible for a high share of employment, value added, and trade both at the national and at the regional levels. We also show that the distribution of foreign affiliates across regions differs with the nationality of the parent. We then show that foreign affiliates increase the comovement of activities between their region of location and their country of ownership. Moreover, we find greater comovement among French regions that have a more similar composition in terms of the nationality of foreign affiliates. These findings suggest that a non-negligible part of business cycle comovement is driven by a few multinational companies, and that the international transmission of shocks is partly due to linkages between affiliates and their foreign parents.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.dallasfed.org/assets/documents/institute/wpapers/2012/0116.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Federal Reserve Bank of Dallas in its series Globalization and Monetary Policy Institute Working Paper with number 116.

as in new window
Length:
Date of creation: 2012
Date of revision:
Handle: RePEc:fip:feddgw:116

Contact details of provider:
Email:
Web page: http://www.dallasfed.org/
More information through EDIRC

Order Information:
Email:

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. César Calderón & Alberto Chong & Ernesto H. Stein, 2003. "Trade Intensity and Business Cycle Synchronization: Are Developing Countries any Different?," Research Department Publications 4315, Inter-American Development Bank, Research Department.
  2. Julian di Giovanni & Andrei Levchenko & Isabelle Mejean, 2014. "Firms, Destinations, and Aggregate Fluctuations," NBER Working Papers 20061, National Bureau of Economic Research, Inc.
  3. Giuseppe Moscarini & Fabien Postel-Vinay, 2009. "Large Employers Are More Cyclically Sensitive," Bristol Economics Discussion Papers 09/609, Department of Economics, University of Bristol, UK.
  4. Robert C. Johnson, 2012. "Trade in Intermediate Inputs and Business Cycle Comovement," NBER Working Papers 18240, National Bureau of Economic Research, Inc.
  5. Hsu, Chih-Chiang & Wu, Jyun-Yi & Yau, Ruey, 2011. "Foreign direct investment and business cycle co-movements: The panel data evidence," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 770-783.
  6. Claudia M. Buch & Jörn Kleinert & Alexander Lipponer & Farid Toubal, 2005. "Determinants and effects of foreign direct investment: evidence from German firm-level data," Economic Policy, CEPR & CES & MSH, vol. 20(41), pages 52-110, 01.
  7. Pinelopi Goldberg & Rebecca Hellerstein, 2009. "How Rigid Are Producer Prices?," Working Papers 1184, Princeton University, Department of Economics, Center for Economic Policy Studies..
  8. Ramondo, Natalia & Rappoport, Veronica, 2010. "The role of multinational production in a risky environment," Journal of International Economics, Elsevier, vol. 81(2), pages 240-252, July.
  9. Julian di Giovanni & Andrei A. Levchenko, 2010. "Putting the Parts Together: Trade, Vertical Linkages, and Business Cycle Comovement," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 95-124, April.
  10. W. Jos Jansen & Ad C.J. Stokman, 2003. "International Rent Sharing and Domestic Labour Markets: A Macroeconomic Analysis," MEB Series (discontinued) 2003-14, Netherlands Central Bank, Monetary and Economic Policy Department.
  11. Antràs, Pol & Chor, Davin & Fally, Thibault & Hillberry, Russell, 2012. "Measuring the Upstreamness of Production and Trade Flows," CEPR Discussion Papers 8839, C.E.P.R. Discussion Papers.
  12. Xavier Gabaix, 2005. "The Granular Origins of Aggregate Fluctuations," 2005 Meeting Papers 470, Society for Economic Dynamics.
  13. Julian di Giovanni & Andrei A. Levchenko, 2011. "Country Size, International Trade, and Aggregate Fluctuations in Granular Economies," NBER Working Papers 17335, National Bureau of Economic Research, Inc.
  14. Andrei A. Levchenko & Julian di Giovanni, 2009. "International Trade and Aggregate Fluctuations in Granular Economies," 2009 Meeting Papers 491, Society for Economic Dynamics.
  15. Enghin Atalay & Ali Hortacsu & Chad Syverson, 2012. "Why Do Firms Own Production Chains?," NBER Working Papers 18020, National Bureau of Economic Research, Inc.
  16. Robert E. Lipsey, 2008. "Measuring the Location of Production in a World of Intangible Productive Assets, FDI, and Intrafirm Trade," NBER Working Papers 14121, National Bureau of Economic Research, Inc.
  17. Robert Inklaar & Richard Jong-A-Pin & Jakob de Haan, 2005. "Trade and Business Cycle Synchronization in OECD Countries - a Re-examination," CESifo Working Paper Series 1546, CESifo Group Munich.
  18. Baxter, Marianne & Kouparitsas, Michael A., 2005. "Determinants of business cycle comovement: a robust analysis," Journal of Monetary Economics, Elsevier, vol. 52(1), pages 113-157, January.
  19. Natalia Ramondo & Veronica Rappoport & Kim J. Ruhl, 2011. "Horizontal Vs. Vertical FDI : Revisiting Evidence from U.S. Multinationals," Working Papers 11-12, New York University, Leonard N. Stern School of Business, Department of Economics.
  20. Helpman, Elhanan, 2011. "Understanding Global Trade," Economics Books, Harvard University Press, number 9780674060784.
  21. Andrei Zlate, 2010. "Offshore production and business cycle dynamics with heterogeneous firms," International Finance Discussion Papers 995, Board of Governors of the Federal Reserve System (U.S.).
  22. Morten O. Ravn & Harald Uhlig, 2002. "On adjusting the Hodrick-Prescott filter for the frequency of observations," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 371-375.
  23. Andrei A. Levchenko & Julian di Giovanni, 2009. "Putting the Parts together," IMF Working Papers 09/181, International Monetary Fund.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Bruce A. Blonigen & Jeremy Piger & Nicholas Sly, 2012. "Comovement in GDP Trends and Cycles Among Trading Partners," NBER Working Papers 18032, National Bureau of Economic Research, Inc.
  2. Claudia Busl & Marcus Kappler, 2013. "Does Foreign Direct Investment Synchronise Business Cycles? Results from a Panel Approach," WWWforEurope Working Papers series 23, WWWforEurope.
  3. Sebastian Florian Enea & Silvia Palaºcã, 2012. "Globalization Versus Segregation - Business Cycles Synchronization In Europe," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4, pages 668-692, December.
  4. Myriam Alejandra Gómez Cárdenas, 2013. "Volatility in the Mexican offshoring industry," Post-Print dumas-00910194, HAL.
  5. Wagner, Joachim & Gelübcke, John P. Weche, 2013. "Risk or Resilience? The Role of Trade Integration and Foreign Ownership for the Survival of German Enterprises during the Crisis 2008-2010," Working Paper Series in Economics and Institutions of Innovation 340, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  6. Nicholas Sly & Caroline Weber, 2013. "International Fiscal Policy Coordination and GDP Comovement," CESifo Working Paper Series 4358, CESifo Group Munich.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:fip:feddgw:116. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Amy Chapman).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.