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International Transmission of Business Cycles Between Ireland and its Trading Partners

  • Goggin, Jean

    (ESRI)

  • Siedschlag, Iulia

    (ESRI)

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
Date of revision:
Handle: RePEc:esr:wpaper:wp279
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