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Synchronization of business cycles and economic policy linkages in ASEAN

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  • Sethapramote, Yuthana

Abstract

We investigate business cycle synchronization and economic policy linkage in the Association of Southeast Asian Nations (ASEAN). Two important findings are addressed. First, we measure static and dynamic correlations in both macroeconomic variables and policy variables. The vector autoregression and the dynamic conditional correlation model are applied to capture the dynamics of the co-movement pattern in particular. The empirical results show evidence of synchronization in key macroeconomic variables such as gross domestic product, inflation, export, and exchange rates within ASEAN. However, supporting evidence of economic policy linkages are found in only a few cases. Second, the panel regressions show that trade integration is the main factor in the synchronization of the business cycles within ASEAN. Moreover, monetary policy linkage contributes to this co-movement pattern. Financial integration is an important factor only in the correlation between ASEAN and the United States, while the role of fiscal policy linkage is not significant in every case.

Suggested Citation

  • Sethapramote, Yuthana, 2015. "Synchronization of business cycles and economic policy linkages in ASEAN," Journal of Asian Economics, Elsevier, vol. 39(C), pages 126-136.
    • Handle: RePEc:eee:asieco:v:39:y:2015:i:c:p:126-136
    DOI: 10.1016/j.asieco.2015.06.003
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    Cited by:

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    2. Saini, Seema & Ahmad, Wasim & Bekiros, Stelios, 2021. "Understanding the credit cycle and business cycle dynamics in India," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 988-1006.
    3. Jeerawadee Pumjaroen & Preecha Vichitthamaros & Yuthana Sethapramote, 2020. "Forecasting Economic Cycle with a Structural Equation Model: Evidence from Thailand," International Journal of Economics and Financial Issues, Econjournals, vol. 10(3), pages 47-57.
    4. Masahito Ambashi & Fusanori Iwasaki & Keita Oikawa, 2021. "Prediction Errors of Macroeconomic Indicators and Economic Shocks for ASEAN Member States," Working Papers DP-2022-02, Economic Research Institute for ASEAN and East Asia (ERIA).
    5. Krzysztof Beck, 2022. "Macroeconomic policy coordination and the European business cycle: Accounting for model uncertainty and reverse causality," Bulletin of Economic Research, Wiley Blackwell, vol. 74(4), pages 1095-1114, October.
    6. Masahito Ambashi & Fusanori Iwasaki & Keita Oikawa, 2022. "Prediction Errors of Macroeconomic Indicators and Economic Shocks for ASEAN Member States, 1990-2021," KIER Working Papers 1088, Kyoto University, Institute of Economic Research.
    7. Lindman, Sebastian & Tuvhag, Tom & Jayasekera, Ranadeva & Uddin, Gazi Salah & Troster, Victor, 2020. "Market Impact on financial market integration: Cross-quantilogram analysis of the global impact of the euro," Journal of Empirical Finance, Elsevier, vol. 56(C), pages 42-73.
    8. Krzysztof Beck, 2021. "Capital mobility and the synchronization of business cycles: Evidence from the European Union," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 1065-1079, September.

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    More about this item

    Keywords

    Business cycle synchronization; International policy coordination; Dynamic correlation; ASEAN;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
    • F15 - International Economics - - Trade - - - Economic Integration
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

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