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The First Global Recession in Decades

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  • Imbs, Jean

Abstract

I use monthly data on industrial production to estimate the distribution of international business cycle correlations since the 1980's, with focus on the current turmoil. The degree of international correlation in national business cycles since the end of 2008 is unprecedented in three decades. From 2008M12, an upward shift in the cross-sectional distribution of cycles synchronization is sizeable and significant, especially between advanced economies. The magnitude of the shift is unprecedented in recent history, even relative to what happened since 1973 after alternative shocks with worldwide consequences. The shift does not arise because volatilities changed with the crisis. Both goods and assets trade have contributed to this synchronization. The (large and significant) synchronization amongst OECD economies is associated with financial openness. The (weaker) diffusion amongst developing economies tends to happen between trade partners.

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  • Imbs, Jean, 2010. "The First Global Recession in Decades," CEPR Discussion Papers 7973, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7973
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    More about this item

    Keywords

    Financial Linkages; International Business Cycle; Sub-Prime Crisis; Trade Linkages;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F15 - International Economics - - Trade - - - Economic Integration
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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