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Business cycle synchronization and regional integration: a case study for Central America

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  • Fiess, Norbert

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 United States, it is expected that there will be closer links in business cycles between Central American countries and the United States. The paper finds a relatively low degree of business cycle synchronization within Central America as well as between Central America and the United States. The business cycle synchronization is expected to increase only modestly with further trade expansion, making the coordination of macroeconomic policies within CAFTA somewhat less of a priority.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3584.

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Date of creation: 01 Apr 2005
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Handle: RePEc:wbk:wbrwps:3584

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Keywords: TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Business in Development; Business Environment; Economic Theory&Research; Environmental Economics&Policies;

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Cited by:
  1. 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.
  2. HIRATA Hideaki & Ayhan KOSE & Christopher OTROK, 2013. "Regionalization vs. Globalization," Discussion papers 13004, Research Institute of Economy, Trade and Industry (RIETI).
  3. 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, January.
  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. World Bank, 2008. "Local Gains from Global Opportunities : Improving Central America's Investment Climate," World Bank Other Operational Studies 7959, The World Bank.
  6. 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.
  7. Andrew Swiston, 2010. "Spillovers to Central America in Light of the Crisis: What a Difference a Year Makes," IMF Working Papers 10/35, International Monetary Fund.
  8. Emilio Espino & Julian Kozlowski & Juan M. Sánchez, 2013. "Regionalization vs. globalization," Working Papers 2013-002, Federal Reserve Bank of St. Louis.

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