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International Transmission of Business Cycles Between Ireland and its Trading Partners

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Listed author(s):
  • Goggin, Jean

    (ESRI)

  • Siedschlag, Iulia

    (ESRI)

Abstract

This paper examines patterns and factors underlying the international transmission of business cycles between Ireland and its trading partners over the period 1980-2007. We estimate a model of simultaneous equations using a panel of cross-country annual data where trade integration, sectoral specialisation and financial integration are considered endogenous. Our results suggest that deeper trade and financial integration had strong direct positive effects on the synchronisation of Irish business cycles with its trading partners. Sectoral specialisation and national competitiveness differentials were sources of cyclical divergence. Sectoral specialisation had however an indirect positive effect on business cycle synchronisation via its positive effect on trade and financial integration. The adoption of the euro has led to more synchronised business cycles between Ireland and its euro area trading partners.

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Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP279.

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Length: 46 pages
Date of creation: Feb 2009
Handle: RePEc:esr:wpaper:wp279
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Keywords:

Find related papers by JEL classification:

  • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
  • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
  • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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Cited by:

  1. Bergin, Adele & Conefrey, Thomas & FitzGerald, John & Kearney, Ide, 2009. "Recovery Scenarios for Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS007.
  2. Salá Rios, Mercé & Farré Perdiguer, Mariona & Torres Solé, Teresa, 2011. "El ciclo económico de Cataluña. Un análisis de la simetría respecto a España y a la UEM/Catalonia's Business Cycle. An Analysis of the Symmetry in Relation to Spain and the EMU," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 29, pages 913(24á.)-9, Diciembre.

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