IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Regionalization vs. Globalization

  • Hideaki Hirata
  • M. Ayhan Kose
  • Christopher Otrok

Both global and regional economic linkages have strengthened substantially over the past quarter century. We employ a dynamic factor model to analyze the implications of these linkages for the evolution of global and regional business cycles. Our model allows us to assess the roles played by the global, regional, and country-specific factors in explaining business cycles in a large sample of countries and regions over the period 1960-2010. We find that, since the mid-1980s, the importance of regional factors has increased markedly in explaining business cycles especially in regions that experienced a sharp growth in intra-regional trade and financial flows. By contrast, the relative importance of the global factor has declined over the same period. In short, the recent era of globalization has witnessed the emergence of regional business cycles.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: https://cama.crawford.anu.edu.au/pdf/working-papers/2013/092013.pdf
Download Restriction: no

Paper provided by Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University in its series CAMA Working Papers with number 2013-09.

as
in new window

Length: 64 pages
Date of creation: Feb 2013
Date of revision:
Handle: RePEc:een:camaaa:2013-09
Contact details of provider: Postal: Crawford Building, Lennox Crossing, Building #132, Canberra ACT 2601
Phone: +61 2 6125 4705
Fax: +61 2 6125 5448
Web page: http://cama.crawford.anu.edu.au
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Domenico Giannone & Michele Lenza & Lucrezia Reichlin, 2010. "Business Cycles in the Euro Area," NBER Chapters, in: Europe and the Euro, pages 141-167 National Bureau of Economic Research, Inc.
  2. Otrok, C. & Whiteman, C.H., 1996. "Bayesian Leading Indicators: Measuring and Predicting Economic Conditions in Iowa," Working Papers 96-14, University of Iowa, Department of Economics.
  3. Brian M. Doyle & Jon Faust, 2005. "Breaks in the Variability and Comovement of G-7 Economic Growth," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 721-740, November.
  4. Viv Hall & John McDermott, 2008. "An Unobserved Components Common Cycle For Australia? Implications For A Common Currency," CAMA Working Papers 2008-11, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  5. W. Jos Jansen & Ad C.J. Stokman, 2004. "Foreign Direct Investment and International Business Cycle Comovement," Macroeconomics 0402029, EconWPA.
  6. Ando, Mitsuyo, 2006. "Fragmentation and vertical intra-industry trade in East Asia," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 257-281, December.
  7. Victor Zarnowitz, 1992. "Business Cycles: Theory, History, Indicators, and Forecasting," NBER Books, National Bureau of Economic Research, Inc, number zarn92-1, June.
  8. Lee, Jim, 2012. "Measuring business cycle comovements in Europe: Evidence from a dynamic factor model with time-varying parameters," Economics Letters, Elsevier, vol. 115(3), pages 438-440.
  9. Torres, Alberto & Vela, Oscar, 2003. "Trade integration and synchronization between the business cycles of Mexico and the United States," The North American Journal of Economics and Finance, Elsevier, vol. 14(3), pages 319-342, December.
  10. Doz, Catherine & Giannone, Domenico & Reichlin, Lucrezia, 2006. "A Quasi Maximum Likelihood Approach for Large Approximate Dynamic Factor Models," CEPR Discussion Papers 5724, C.E.P.R. Discussion Papers.
  11. Athukorala, Prema-chandra & Yamashita, Nobuaki, 2006. "Production fragmentation and trade integration: East Asia in a global context," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 233-256, December.
  12. Hoffmaister, Alexander W. & Pradhan, Mahmood & Samiei, Hossein, 1998. "Have North-South growth linkages changed?," World Development, Elsevier, vol. 26(5), pages 791-808, May.
  13. Forni, Mario & Hallin, Marc & Lippi, Marco & Reichlin, Lucrezia, 1999. "The Generalized Dynamic Factor Model: Identification and Estimation," CEPR Discussion Papers 2338, C.E.P.R. Discussion Papers.
  14. Allegret, Jean-Pierre & Essaadi, Essahbi, 2011. "Business cycles synchronization in East Asian economy: Evidences from time-varying coherence study," Economic Modelling, Elsevier, vol. 28(1), pages 351-365.
  15. U. Michael Bergman & Michael D. Bordo & Lars Jonung, 1998. "Historical evidence on business cycles: the international experience," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, vol. 42(Jun), pages 65-119.
  16. Böwer, Uwe & Guillemineau, Catherine, 2006. "Determinants of business cycle synchronisation across euro area countries," Working Paper Series 0587, European Central Bank.
  17. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1, June.
  18. Kei-Mu Yi, 2003. "Can Vertical Specialization Explain the Growth of World Trade?," Journal of Political Economy, University of Chicago Press, vol. 111(1), pages 52-102, February.
  19. Choe, Jong-Il, 2001. "An impact of economic integration through trade: on business cycles for 10 East Asian countries," Journal of Asian Economics, Elsevier, vol. 12(4), pages 569-586.
  20. Dong He & Wei Liao, 2012. "Asian Business Cycle Synchronization," Pacific Economic Review, Wiley Blackwell, vol. 17(1), pages 106-135, 02.
  21. Peter A. Petri & Michael G. Plummer & Fan Zhai, 2012. "The Trans-Pacific Partnership and Asia-Pacific Integration: A Quantitative Assessment," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 6642.
  22. César Calderón & Alberto Chong & Ernesto H. Stein, 2003. "Trade Intensity and Business Cycle Synchronization: Are Developing Countries any Different?," Research Department Publications 4315, Inter-American Development Bank, Research Department.
  23. Enzo Weber, 2007. "Regional and Outward Economic Integration in South-East Asia," SFB 649 Discussion Papers SFB649DP2007-019, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  24. Julian di Giovanni & Andrei A. Levchenko, 2010. "Putting the Parts Together: Trade, Vertical Linkages, and Business Cycle Comovement," American Economic Journal: Macroeconomics, American Economic Association, vol. 2(2), pages 95-124, April.
  25. Bayoumi, Tamim & Eichengreen, Barry & Mauro, Paolo, 2000. "On Regional Monetary Arrangements For ASEAN," CEPR Discussion Papers 2411, C.E.P.R. Discussion Papers.
  26. Leif Anders Thorsrud, 2013. "Global and regional business cycles. Shocks and propagations," Working Paper 2013/08, Norges Bank.
  27. Imbs, Jean, 2003. "Trade, Finance, Specialization and Synchronization," CEPR Discussion Papers 3779, C.E.P.R. Discussion Papers.
  28. Kose, M. Ayhan & Rebucci, Alessandro, 2005. "How might CAFTA change macroeconomic fluctuations in Central America?: Lessons from NAFTA," Journal of Asian Economics, Elsevier, vol. 16(1), pages 77-104, February.
  29. Kwanho Shin & Chan-Hyun Sohn, 2006. "Trade and Financial Integration in East Asia: Effects on Co-movements," The World Economy, Wiley Blackwell, vol. 29(12), pages 1649-1669, December.
  30. Christopher Otrok & Ayhan Kose & Mario J. Crucini, 2009. "What are the driving forces of international business cycles," 2009 Meeting Papers 820, Society for Economic Dynamics.
  31. Chen, Shyh-Wei & Shen, Chung-Hua, 2007. "A sneeze in the U.S., a cough in Japan, but pneumonia in Taiwan? An application of the Markov-Switching vector autoregressive model," Economic Modelling, Elsevier, vol. 24(1), pages 1-14, January.
  32. Keith R. Phillips & Jesus Canas, 2004. "Business cycle coordination along the Texas-Mexico border," Working Papers 0502, Federal Reserve Bank of Dallas.
  33. Atilim Seymen, 2012. "Euro area business cycles," OECD Journal: Journal of Business Cycle Measurement and Analysis, OECD Publishing,Centre for International Research on Economic Tendency Surveys, vol. 2012(1), pages 1-31.
  34. Genberg, Hans & Siklos, Pierre L., 2010. "Revisiting the shocking aspects of Asian monetary unification," Journal of Asian Economics, Elsevier, vol. 21(5), pages 445-455, October.
  35. Canova, Fabio & Ciccarelli, Matteo & Ortega, Eva, 2004. "Similarities and Convergence in G7 Cycles," CEPR Discussion Papers 4534, C.E.P.R. Discussion Papers.
  36. Michael A. Kouparitsas, 1999. "Is the EMU a viable common currency area? a VAR analysis of regional business cycles," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 2-20.
  37. Çigdem Akin & M. Ayhan Kose, 2007. "Changing Nature of North-South Linkages; Stylized Facts and Explanations," IMF Working Papers 07/280, International Monetary Fund.
  38. James Mitchell & Michael Massmann, 2004. "Reconsidering the evidence: are Eurozone business cycles converging?," Money Macro and Finance (MMF) Research Group Conference 2003 67, Money Macro and Finance Research Group.
  39. repec:idb:brikps:59478 is not listed on IDEAS
  40. Hideaki Hirata & Sunghyun Henry Kim & M. Ayhan Kose, 2007. "Sources of Fluctuations: The Case of MENA," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 43(1), pages 5-34, February.
  41. Andrew K. Rose & Mark M. Spiegel, 2011. "Cross-country causes and consequences of the crisis: an update," Working Paper Series 2011-02, Federal Reserve Bank of San Francisco.
  42. Jorge Herrera Hernández, 2004. "Business cycles in Mexico and the United States: Do they share common movements?," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 303-323, November.
  43. Haan, Jakob de & Inklaar, Robert & Jong-A-Pin, Richard, 2005. "Will business cycles in the Euro Area converge : a critical survey of empirical research," CCSO Working Papers 200508, University of Groningen, CCSO Centre for Economic Research.
  44. Lee Chin & M. Azali, 2012. "Testing the validity of the monetary model for ASEAN with structural break," Applied Economics, Taylor & Francis Journals, vol. 44(25), pages 3229-3236, September.
  45. Norbert Fiess, 2007. "Business Cycle Synchronization and Regional Integration: A Case Study for Central America," World Bank Economic Review, World Bank Group, vol. 21(1), pages 49-72.
  46. Pradumna B. Rana, 2008. "Trade Intensity And Business Cycle Synchronization: The Case Of East Asian Countries," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 53(02), pages 279-292.
  47. Sargent, Thomas J, 1989. "Two Models of Measurements and the Investment Accelerator," Journal of Political Economy, University of Chicago Press, vol. 97(2), pages 251-87, April.
  48. Kumakura, Masanaga, 2006. "Trade and business cycle co-movements in Asia-Pacific," Journal of Asian Economics, Elsevier, vol. 17(4), pages 622-645, October.
  49. Sato, K. & Zhang, Z. & McAleer, M.J., 2009. "Identifying Shocks in Regionally Integrated East Asian Economies with Structural VaR and Block Exogeneity," Econometric Institute Research Papers EI 2009-49, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
  50. Crosby, Mark, 2003. "Business cycle correlations in Asia-Pacific," Economics Letters, Elsevier, vol. 80(1), pages 35-44, July.
  51. Artis, Michael J & Zhang, Wenda, 1995. "International Business Cycles and the ERM: Is there a European Business Cycle?," CEPR Discussion Papers 1191, C.E.P.R. Discussion Papers.
  52. Sørensen, Bent E & Wu, Yi-Tsung & Yosha, Oved & Zhu, Yu, 2005. "Home Bias and International Risk Sharing: Twin Puzzles Separated at Birth," CEPR Discussion Papers 5113, C.E.P.R. Discussion Papers.
  53. Gian-Maria Milesi-Ferretti & Natalia T. Tamirisa & Francesco Strobbe, 2010. "Bilateral Financial Linkages and Global Imbalances; A Viewon the Eve of the Financial Crisis," IMF Working Papers 10/257, International Monetary Fund.
  54. Selover, David D., 2004. "International co-movements and business cycle transmission between Korea and Japan," Journal of the Japanese and International Economies, Elsevier, vol. 18(1), pages 57-83, March.
  55. Rana, Pradumna B., 2007. "Economic integration and synchronization of business cycles in East Asia," Journal of Asian Economics, Elsevier, vol. 18(5), pages 711-725, October.
  56. Soyoung Kim & Jong‐Wha Lee & Cyn‐Young Park, 2011. "Emerging Asia: Decoupling or Recoupling," The World Economy, Wiley Blackwell, vol. 34(1), pages 23-53, 01.
  57. Jarko Fidrmuc & Iikka Korhonen, 2009. "The Impact of the Global Financial Crisis on Business Cycles in Asian Emerging Economies," CESifo Working Paper Series 2710, CESifo Group Munich.
  58. Pérez García Francisco & Arribas Fernández Iván & Tortosa-Ausina Emili, 2012. "Trade Integration in the European Union: Relative Contributions of Openness and Interconnectedness," Working Papers 2012112, Fundacion BBVA / BBVA Foundation.
  59. Andrews, Donald W K, 1993. "Tests for Parameter Instability and Structural Change with Unknown Change Point," Econometrica, Econometric Society, vol. 61(4), pages 821-56, July.
  60. Michael Artis & Massimiliano Marcellino & Tommaso Proietti, 2004. "Dating Business Cycles: A Methodological Contribution with an Application to the Euro Area," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(4), pages 537-565, 09.
  61. Ng, Eric C.Y., 2010. "Production fragmentation and business-cycle comovement," Journal of International Economics, Elsevier, vol. 82(1), pages 1-14, September.
  62. Chow, Hwee Kwan & Kim, Yoonbai, 2003. "A common currency peg in East Asia? Perspectives from Western Europe," Journal of Macroeconomics, Elsevier, vol. 25(3), pages 331-350, September.
  63. Ian Babetskii, 2005. "Trade integration and synchronization of shocks," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(1), pages 105-138, 01.
  64. Rachel Male, 2010. "Developing Country Business Cycles: Characterising the Cycle," Working Papers 663, Queen Mary University of London, School of Economics and Finance.
  65. Iulia Siedschlag & Gabriele Tondl, 2011. "Regional output growth synchronisation with the Euro Area," Empirica, Springer, vol. 38(2), pages 203-221, May.
  66. Scott Davis, 2011. "Financial integration and international business cycle co-movement: the role of balance sheets," Globalization and Monetary Policy Institute Working Paper 89, Federal Reserve Bank of Dallas.
  67. Michael Artis & Christian Dreger & Konstantin Kholodilin, 2011. "What Drives Regional Business Cycles? The Role Of Common And Spatial Components," Manchester School, University of Manchester, vol. 79(5), pages 1035-1044, 09.
  68. Eswar Prasad & Marco Terrones & M. Ayhan Kose, 2008. "Does Openness to International Financial Flows Raise Productivity Growth?," IMF Working Papers 08/242, International Monetary Fund.
  69. Rachel Male, 2011. "Developing Country Business Cycles: Characterizing the Cycle," Emerging Markets Finance and Trade, M.E. Sharpe, Inc., vol. 47(0), pages 20-39, May.
  70. Giannone, Domenico & Reichlin, Lucrezia, 2006. "Trends and cycles in the euro area: how much heterogeneity and should we worry about it?," Working Paper Series 0595, European Central Bank.
  71. Carlos Cortinhas, 2005. "Intra-Industry Trade and Business Cycles in ASEAN," NIPE Working Papers 7/2005, NIPE - Universidade do Minho.
  72. Lee Yu-Feng L, 2007. "Bilateral Trade and Intra-Regional Business Cycles: Is East Asia Feasible for a Currency Area?," Global Economy Journal, De Gruyter, vol. 7(3), pages 1-12, October.
  73. Chiquiar, Daniel & Ramos-Francia, Manuel, 2005. "Trade and business-cycle synchronization: evidence from Mexican and U.S. manufacturing industries," The North American Journal of Economics and Finance, Elsevier, vol. 16(2), pages 187-216, August.
  74. Mazzenga, Elisabetta & Ravn, Morten O, 2002. "International Business Cycles: The Quantitative Role of Transportation Costs," CEPR Discussion Papers 3530, C.E.P.R. Discussion Papers.
  75. Lee, Grace H.Y. & Koh, Sharon G.M., 2012. "The prospects of a monetary union in East Asia," Economic Modelling, Elsevier, vol. 29(2), pages 96-102.
  76. Neaime Simon, 2005. "Financial Market Integration and Macroeconomic Volatility in the MENA Region: An Empirical Investigation," Review of Middle East Economics and Finance, De Gruyter, vol. 3(3), pages 59-83, December.
  77. Koen De Backer & Norihiko Yamano, 2007. "The Measurement of Globalisation using International Input-Output Tables," OECD Science, Technology and Industry Working Papers 2007/8, OECD Publishing.
  78. Mehrara, Mohsen & Oskoui, Kamran Niki, 2007. "The sources of macroeconomic fluctuations in oil exporting countries: A comparative study," Economic Modelling, Elsevier, vol. 24(3), pages 365-379, May.
  79. Kiyotaka Sato & Zhaoyong Zhang, 2006. "Real Output Co-movements in East Asia: Any Evidence for a Monetary Union?," The World Economy, Wiley Blackwell, vol. 29(12), pages 1671-1689, December.
  80. Tilak Abeysinghe & Kristin Forbes, 2005. "Trade Linkages and Output-Multiplier Effects: a Structural VAR Approach with a Focus on Asia," Review of International Economics, Wiley Blackwell, vol. 13(2), pages 356-375, 05.
  81. Grace H.Y. Lee & M. Azali, 2009. "THE ENDOGENEITY OF THE OPTIMUM CURRENCY AREA CRITERIA IN EAST ASIa," Monash Economics Working Papers 15-09, Monash University, Department of Economics.
  82. Andrés Rodríguez-Pose & Ugo Fratesi, 2006. "Regional business cycles and the emergence of sheltered economies in the southern periphery of Europe," Bruges European Economic Research Papers 7, European Economic Studies Department, College of Europe.
  83. By Norman Loayza & Humberto Lopez & Angel Ubide, 2001. "Comovements and Sectoral Interdependence: Evidence for Latin America, East Asia, and Europe," IMF Staff Papers, Palgrave Macmillan, vol. 48(2), pages 7.
  84. Michael A. Kouparitsas, 2001. "Is the United States an optimum currency area? an empirical analysis of regional business cycles," Working Paper Series WP-01-22, Federal Reserve Bank of Chicago.
  85. Viv Hall & Kunhong Kim & Robert Buckle, 1998. "Pacific rim business cycle analysis: Synchronisation and volatility," New Zealand Economic Papers, Taylor & Francis Journals, vol. 32(2), pages 129-159.
  86. Moneta, Fabio & Rüffer, Rasmus, 2009. "Business cycle synchronisation in East Asia," Journal of Asian Economics, Elsevier, vol. 20(1), pages 1-12, January.
  87. Keith Phillips & Jesus Cañas, 2008. "Regional business cycle integration along the US–Mexico border," The Annals of Regional Science, Springer, vol. 42(1), pages 153-168, March.
  88. S. Jules-Armand Tapsoba, 2009. "Trade Intensity and Business Cycle Synchronicity in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 18(2), pages 287-318, March.
  89. Mario Forni & Lucrezia Reichlin, 2001. "Federal policies and local economies: Europe and the U.S," ULB Institutional Repository 2013/10141, ULB -- Universite Libre de Bruxelles.
  90. Maria Bejan, 2011. "Trade Agreements and International Comovements: the Case of NAFTA (North American Free Trade Agreement)," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(4), pages 667-685, October.
  91. Michael Massmann & James Mitchell, 2004. "Reconsidering the Evidence: Are Euro Area Business Cycles Converging?," Journal of Business Cycle Measurement and Analysis, OECD Publishing,Centre for International Research on Economic Tendency Surveys, vol. 2004(3), pages 275-307.
  92. Klaus Weyerstrass & Bas Aarle & Marcus Kappler & Atilim Seymen, 2011. "Business Cycle Synchronisation with(in) the Euro Area: in Search of a ‘Euro Effect’," Open Economies Review, Springer, vol. 22(3), pages 427-446, July.
  93. Siem Jan Koopman & Jo�o Valle E Azevedo, 2008. "Measuring Synchronization and Convergence of Business Cycles for the Euro area, UK and US," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(1), pages 23-51, 02.
  94. International Monetary Fund, 2010. "European Financial Linkages; A New Look At Imbalances," IMF Working Papers 10/295, International Monetary Fund.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:een:camaaa:2013-09. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Cama Admin)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.