Advanced Search
MyIDEAS: Login

International Trade and Comovement of Business Cycles

Contents:

Author Info

  • M. Ayhan Kose

    (International Monetary Fund)

  • Andrei A. Levchenko

    (International Monetary Fund)

  • Julian di Giovanni

    (International Monetary Fund)

Abstract

This paper examines the impact of international trade on business cycle comovement using a unique dataset of sectoral output and trade flows. While the earlier studies employing aggregate data are certainly useful in understanding the broad impact of trade linkages on the transmission of business cycles, they are not helpful in analyzing the mechanisms through which trade flows affect business cycle comovement. This is particularly important considering that the nature of trade linkages has been changing due to the rapid growth of intra-industry (sectoral) trade flows (see Kehoe and Ruhl, 2003). Moreover, the use of sectoral data allows us to test the relevance of certain theoretical predictions and helps improve the design of stochastic dynamic general equilibrium models (see Kose and Yi, 2006; Bergoeing and Kehoe, 2003). For example, if industry-specific shocks are important in driving business cycles, theory predicts that increased intra-industry specialization across countries can increase cyclical comovement, but the degree of comovement might fall if inter-industry trade linkages are spurred. Our findings suggest that the impact of trade on the degree of business cycle comovement is two to three times larger than that estimated in earlier studies using aggregate data. This result is mainly driven by the dominant role played by intra-industry trade flows. In particular, sectors with relatively larger intra-industry trade exhibit a higher degree of comovement across countries. The impact of trade on business cycle comovement is three to four times larger in pairs of developed countries than those of developing ones.

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2007 Meeting Papers with number 842.

as in new window
Length:
Date of creation: 2007
Date of revision:
Handle: RePEc:red:sed007:842

Contact details of provider:
Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
Fax: 1-314-444-8731
Email:
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC

Related research

Keywords:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

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:red:sed007:842. 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: (Christian Zimmermann).

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.