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Business Cycle Synchronization and Regional Integration: A Case Study for Central America

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  • Norbert Fiess

Abstract

In early January 2003, the United States and Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua launched official negotiations for the Central American Free Trade Agreement (CAFTA), a treaty that would expand NAFTA-style trade barrier reductions to Central America. With deeper trade integration between Central America and the US, it is expected that there will be closer links in business cycles among Central America and the US. The aim of this paper is to assess the degree of business cycle synchronization between Central America and the US. This is not only relevant for a better understanding of the influence of important trading partners on the business cycle fluctuations in the domestic economy. It has also an important implication in terms of evaluating the costs and benefits of macroeconomic coordination.

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Paper provided by Business School - Economics, University of Glasgow in its series Working Papers with number 2005_14.

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Handle: RePEc:gla:glaewp:2005_14

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Cited by:
  1. Hideaki Hirata & M. Ayhan Kose & Christopher Otrok, 2013. "Regionalization vs. Globalization," Koç University-TUSIAD Economic Research Forum Working Papers 1302, Koc University-TUSIAD Economic Research Forum.
  2. Emilio Espino & Julian Kozlowski & Juan M. Sánchez, 2013. "Regionalization vs. globalization," Working Papers 2013-002, Federal Reserve Bank of St. Louis.
  3. Andrew Swiston, 2010. "Spillovers to Central America in Light of the Crisis," IMF Working Papers 10/35, International Monetary Fund.
  4. Piljak, Vanja, 2013. "Bond markets co-movement dynamics and macroeconomic factors: Evidence from emerging and frontier markets," Emerging Markets Review, Elsevier, vol. 17(C), pages 29-43.
  5. Gould, David & Loening, Josef L., 2008. "Central America's Macroeconomic Environment and the Role of the Investment Climate under Free Trade," MPRA Paper 25896, University Library of Munich, Germany.
  6. Carlos Felipe Jaramillo & Daniel Lederman & Maurizio Bussolo & David Gould & Andrew Mason, 2006. "Challenges of CAFTA : Maximizing the Benefits for Central America," World Bank Publications, The World Bank, number 7127, July.
  7. Nannette Lindenberg & Frank Westermann, 2009. "How Strong is the Case for Dollarization in Costa Rica? A Note on the Business Cycle Comovements with the United States," CESifo Working Paper Series 2785, CESifo Group Munich.
  8. World Bank, 2008. "Local Gains from Global Opportunities : Improving Central America's Investment Climate," World Bank Other Operational Studies 7959, The World Bank.

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