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Global trade and GDP comovement

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  • de Soyres, François
  • Gaillard, Alexandre

Abstract

This paper revisits the relationship between trade and cross-country GDP correlation for 134 countries from 1970 to 2009. We introduce two notions of trade linkages: (i) direct bilateral trade index and (ii) common exposure to ”third” countries capturing the role of trade networks. Both are economically and statistically associated with GDP correlation, suggesting an indirect additional channel through which GDP fluctuations propagate through trade linkages. Moreover, high income countries become more synchronized when the content of their trade is tilted toward intermediate inputs while trade in final goods is key for lower income countries. Finally, we present evidence of an increase in the trade comovement slope over the last two decades, which may reflect the increase of the density of the international trade network.

Suggested Citation

  • de Soyres, François & Gaillard, Alexandre, 2022. "Global trade and GDP comovement," Journal of Economic Dynamics and Control, Elsevier, vol. 138(C).
  • Handle: RePEc:eee:dyncon:v:138:y:2022:i:c:s0165188922000586
    DOI: 10.1016/j.jedc.2022.104353
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    2. Oscar Avila-Montealegre & Carter Mix, 2020. "Common Trade Exposure and Business Cycle Comovement," International Finance Discussion Papers 1306, Board of Governors of the Federal Reserve System (U.S.).
    3. Azcona, Nestor, 2022. "Trade and business cycle synchronization: The role of common trade partners," International Economics, Elsevier, vol. 170(C), pages 190-201.
    4. William Barcelona & Danilo Cascaldi-Garcia & Jasper Hoek & Eva Van Leemput, 2022. "What Happens in China Does Not Stay in China," International Finance Discussion Papers 1360, Board of Governors of the Federal Reserve System (U.S.).

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    More about this item

    Keywords

    International trade; International business cycle comovement; Networks; Input-output linkages;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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