IDEAS home Printed from https://ideas.repec.org/p/bkr/wpaper/wps150.html

Synchronisation of business cycles in Russia and China

Author

Listed:
  • Denis Krylov

    (Bank of Russia, Russian Federation)

  • Nikita Pakhmutov

    (Higher School of Economics, Russian Federation)

Abstract

The past two decades have seen a rise in China’s share of global trade. Its role has become particularly prominent in Russia’s foreign economic relations after 2022, due to the reorientation of trade flows from Europe and the United States toward China and other Asian countries. This study aims to assess the impact of the changes in foreign trade on Russian business cycles. Specifically, we intend to verify a hypothesis about a greater degree of synchronisation in the business cycles of China and Russia since 2022, driven by the higher volumes of bilateral trade. We use GVAR with time-varying weights as the method of our analysis. The weights are the shares of the countries that generate value-added foreign trade. We measure the degree of synchronisation between Russia and China based on an analysis of Russia's output impulse responses to simulated positive output shocks for China, taking into account the secondary effects of Asia, the US and Europe. According to our research, the response of Russia's output to positive shock of China’s local output in 2023 was almost double that in 2019. If we simulate a global economic crisis in which a shock in China triggers a proportional drop in the output of other countries, particularly the US and the EU, we find that the degree of synchronisation between 2019 and 2023 remains unchanged. Put differently, the response of Russia’s output to shock of output in China is unchanged under this scenario. Our results can be used to adjust macroeconomic models to the new environment for the Russian economy and thus improve predictive capabilities and analytics.

Suggested Citation

  • Denis Krylov & Nikita Pakhmutov, 2025. "Synchronisation of business cycles in Russia and China," Bank of Russia Working Paper Series wps150, Bank of Russia.
  • Handle: RePEc:bkr:wpaper:wps150
    as

    Download full text from publisher

    File URL: https://www.cbr.ru/StaticHtml/File/176716/wp_150_e.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Davis, J. Scott, 2014. "Financial integration and international business cycle co-movement," Journal of Monetary Economics, Elsevier, vol. 64(C), pages 99-111.
    2. Iossifov, Plamen, 2014. "Cross-border production chains and business cycle co-movement between Central and Eastern European countries and euro area member states," Working Paper Series 1628, European Central Bank.
    3. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
    4. Juliana D. Araujo & Antonio C. David & Carlos Hombeeck & Chris Papageorgiou, 2017. "Non-FDI Capital Inflows in Low-Income Countries: Catching the Wave?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(2), pages 426-465, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Prabheesh, K.P. & Vidya, C.T., 2018. "Do business cycles, investment-specific technology shocks matter for stock returns?," Economic Modelling, Elsevier, vol. 70(C), pages 511-524.
    2. Adnan Haider Bukhari & Safdar Ullah Khan, 2008. "A Small Open Economy DSGE Model for Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(4), pages 963-1008.
    3. Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1991. "Homework in Macroeconomics: Household Production and Aggregate Fluctuations," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1166-1187, December.
    4. Alice Fabre & Stéphane Pallage & Christian Zimmermann, 2014. "Universal Basic Income versus Unemployment Insurance," Cahiers de recherche 1427, CIRPEE.
    5. Wang, Shu-Ling, 2021. "Fiscal stimulus in a high-debt economy? A DSGE analysis," Economic Modelling, Elsevier, vol. 98(C), pages 118-135.
    6. Matteo Bizzarri & Marco Pangallo & Francisco Queirós, 2025. "Production Networks, Time to Build and Endogenous Oscillations," CSEF Working Papers 764, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    7. Evans, Charles L. & Marshall, David A., 2007. "Economic determinants of the nominal treasury yield curve," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 1986-2003, October.
    8. repec:hum:wpaper:sfb649dp2006-030 is not listed on IDEAS
    9. Ray C. Fair, 1986. "Sources of Output and Price Variability in a Macroeconometric Model," NBER Working Papers 2112, National Bureau of Economic Research, Inc.
    10. Masashige Hamano & Pierre M. Picard, 2017. "Extensive and intensive margins and exchange rate regimes," Canadian Journal of Economics, Canadian Economics Association, vol. 50(3), pages 804-837, August.
    11. Hafedh Bouakez & Michel Guillard & Jordan Roulleau-Pasdeloup, 2017. "Public Investment, Time to Build, and the Zero Lower Bound," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 23, pages 60-79, January.
    12. Nebile KORUCU GUMUSOGLU & Julide YILDIRIM & Semsettin KARASU, 2010. "The Effect of Civilian Unemploment on Reenlistment Decision in Turkish Armed Forces," EcoMod2010 259600095, EcoMod.
    13. Florence Contré & Ian Goldin, 1991. "L'agriculture en période d'ajustement au Brésil," Revue Tiers Monde, Programme National Persée, vol. 32(126), pages 271-302.
    14. Huang-Meier, Winifred & Freeman, Mark C., 2015. "Aggregate dividends and consumption smoothing," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 324-335.
    15. Mark Schankerman, 1991. "Revisions of Investment Plans and the Stock Market Rate of Return," STICERD - Economics of Industry Papers 05, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    16. Sharri Byron, 2012. "Examining Foreign Aid Fungibility in Small Open Economies," Open Economies Review, Springer, vol. 23(4), pages 675-712, September.
    17. Bennet T. McCallum, 1984. "A Linearized Version of Lucas's Neutrality Model," Canadian Journal of Economics, Canadian Economics Association, vol. 17(1), pages 138-145, February.
    18. Michael T. Kiley & Jean-Philippe Laforte & Rochelle M. Edge, 2008. "The Sources of Fluctuations in Residential Investment: A View from a Policy-Oriented DSGE Model of the U.S. Economic," 2008 Meeting Papers 990, Society for Economic Dynamics.
    19. Jermann, Urban J., 1998. "Asset pricing in production economies," Journal of Monetary Economics, Elsevier, vol. 41(2), pages 257-275, April.
    20. Mr. Yungsan Kim & Woon Gyu Choi, 2001. "Has Inventory Investment Been Liquidity-Constrained? Evidence From U.S. Panel Data," IMF Working Papers 2001/122, International Monetary Fund.
    21. Giovanni Peri & Laura Bottaz, 2005. "The International Dynamics of R&D and Innovationin the Short Run and in the Long Run," Working Papers 250, University of California, Davis, Department of Economics.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F15 - International Economics - - Trade - - - Economic Integration
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bkr:wpaper:wps150. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: BoR Research The email address of this maintainer does not seem to be valid anymore. Please ask BoR Research to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/cbrgvru.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.