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International business cycle co-movement: the role of FDI

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  • W. Jos Jansen
  • Ad C. J. Stokman

Abstract

This article investigates the relationship between FDI and business cycle synchronization in the period 1982 to 2011 for eight industrialized countries. We find that more synchronized business cycles are associated with stronger FDI relations in the period 1995 to 2011, but not before 1995. More intensive FDI links are also associated with a greater vulnerability to lagged output spillovers from abroad. Our findings suggest that FDI has become a separate channel through which economies may affect each other and that FDI stocks are now an essential aspect of economic interdependence.

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  • W. Jos Jansen & Ad C. J. Stokman, 2014. "International business cycle co-movement: the role of FDI," Applied Economics, Taylor & Francis Journals, vol. 46(4), pages 383-393, February.
    • Handle: RePEc:taf:applec:v:46:y:2014:i:4:p:383-393
    DOI: 10.1080/00036846.2013.844327
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    2. Krzysztof Beck & Ntokozo Patrick Nzimande, 2023. "Labor mobility and business cycle synchronization in Southern Africa," Economic Change and Restructuring, Springer, vol. 56(1), pages 159-179, February.
    3. Dong, Quan & Bárcena-Ruiz, Juan Carlos, 2015. "Does investment in capacity encourage FDI?," Economic Modelling, Elsevier, vol. 51(C), pages 58-64.
    4. Beck, Krzysztof, 2021. "Why business cycles diverge? Structural evidence from the European Union," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    5. Rémi Odry & Roman Mestre, 2021. "Monetary Policy and Business Cycle Synchronization in Europe," EconomiX Working Papers 2021-19, University of Paris Nanterre, EconomiX.
    6. Wanping Yang & Bingyu Zhao, 2021. "The Transmission Mechanism of China-Japan Economic Co-Movement and Stabilizing Measures for China’s Economy," SAGE Open, , vol. 11(1), pages 21582440211, March.
    7. Daragh Clancy & Lorenzo Ricci, 2022. "Economic sentiments and international risk sharing," International Economics, CEPII research center, issue 169, pages 208-229.
    8. Daragh Clancy & Lorenzo Ricci, 2019. "Loss aversion, economic sentiments and international consumption smoothing," Working Papers 35, European Stability Mechanism.

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