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The Micro Origins of International Business Cycle Comovement

Listed author(s):
  • Julian di Giovanni
  • Andrei A. Levchenko
  • Isabelle Mejean

This paper investigates the role of individual firms in international business cycle comovement using data covering the universe of French firm-level value added and international linkages over 1993-2007. At the micro level, trade and multinational linkages with a particular foreign country are associated with a significantly higher correlation between a firm and that foreign country. The impact of direct linkages on comovement at the micro level has significant macro implications. Without those linkages the correlation between France and foreign countries would fall by about 0.098, or one-third of the observed average correlation of 0.291 in our sample of partner countries.

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File URL: http://www.barcelonagse.eu/sites/default/files/working_paper_pdfs/981.pdf
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Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 981.

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Date of creation: Jul 2017
Handle: RePEc:bge:wpaper:981
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  1. Vasco Carvalho, 2007. "Aggregate fluctuations and the network structure of intersectoral trade," Economics Working Papers 1206, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2010.
  2. Wei Liao & Ana Maria Santacreu, 2012. "The Trade Comovement Puzzle and the Margins of International Trade," Working Papers 042012, Hong Kong Institute for Monetary Research.
  3. Javier Cravino & Andrei A. Levchenko, 2017. "Multinational Firms and International Business Cycle Transmission," The Quarterly Journal of Economics, Oxford University Press, vol. 132(2), pages 921-962.
  4. Calderon, Cesar & Chong, Alberto & Stein, Ernesto, 2007. "Trade intensity and business cycle synchronization: Are developing countries any different?," Journal of International Economics, Elsevier, vol. 71(1), pages 2-21, March.
  5. Nitya Pandalai Nayar & Aaron Flaaen & Christoph Boehm, 2015. "Input Linkages and the Transmission of Shocks: Firm-Level Evidence from the 2011 Tohoku Earthquake," 2015 Meeting Papers 383, Society for Economic Dynamics.
  6. repec:bof:bofrdp:urn:nbn:fi:bof-201512101464 is not listed on IDEAS
  7. George Alessandria & Horag Choi, 2007. "Do Sunk Costs of Exporting Matter for Net Export Dynamics?," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 289-336.
  8. Blonigen, Bruce A. & Piger, Jeremy & Sly, Nicholas, 2014. "Comovement in GDP trends and cycles among trading partners," Journal of International Economics, Elsevier, vol. 94(2), pages 239-247.
  9. Daron Acemoglu & Ufuk Akcigit & William Kerr, 2016. "Networks and the Macroeconomy: An Empirical Exploration," NBER Macroeconomics Annual, University of Chicago Press, vol. 30(1), pages 273-335.
  10. Carvalho, Vasco M & Grassi, Basile, 2015. "Large Firm Dynamics and the Business Cycle," CEPR Discussion Papers 10587, C.E.P.R. Discussion Papers.
  11. Burstein, Ariel & Kurz, Christopher & Tesar, Linda, 2008. "Trade, production sharing, and the international transmission of business cycles," Journal of Monetary Economics, Elsevier, vol. 55(4), pages 775-795, May.
  12. Ng, Eric C.Y., 2010. "Production fragmentation and business-cycle comovement," Journal of International Economics, Elsevier, vol. 82(1), pages 1-14, September.
  13. David Baqaee, 2016. "Cascading Failures in Production Networks," 2016 Meeting Papers 402, Society for Economic Dynamics.
  14. Enghin Atalay, 2014. "How Important Are Sectoral Shocks," Working Papers 14-31, Center for Economic Studies, U.S. Census Bureau.
  15. Friberg, Richard & Sanctuary, Mark, 2016. "The contribution of firm-level shocks to aggregate fluctuations: The case of Sweden," Economics Letters, Elsevier, vol. 147(C), pages 8-11.
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