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Has globalization increased the synchronicity of international business cycles?

  • Travis J. Berge

The inexorable rise in levels of interaction and interdependence among the nations of the world has, over the past several decades, caused their economies' business cycles to grow ever more synchronized. ; That is one finding that emerges from an examination of the chronologies of business cycle turning points, in 32 major economies, over a 40-year period. Author Travis Berge demonstrates these cycles have grown more synchronized as trade flows have expanded. ; However, although the trend does seem to be driven by trade linkages, it appears that financial linkages play little or no role. Countries with ever deepening trade relations see their business cycles increasingly aligned; but cross-border holdings of financial assets are not found to have a significant impact on business cycle synchronization.

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Article provided by Federal Reserve Bank of Kansas City in its journal Economic Review.

Volume (Year): (2012)
Issue (Month): Q III ()
Pages:

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Handle: RePEc:fip:fedker:y:2012:i:qiii:n:v.97no.3:x:3
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  1. Jonathan Heathcote & Fabrizio Perri, 2001. "Financial Globalization and Real Regionalization," Working Papers 01-11, New York University, Leonard N. Stern School of Business, Department of Economics.
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