Co-Movements of Business Cycles in the Maghreb: Does Trade Matter?
Over the past two decades, the Maghreb Countries have initiated a liberalization process characterized by increasing trade flows and they have strengthened economic and financial linkages between their economies. In this paper, we demonstrate how co-movements of outputs would respond to this integration process. The nature of this relationship seems to be important for these countries because the decision to join an economic and monetary union would depend on how the union affects trade an co-movements. To this end, we estimate a panel model describing the effect of trade intensity on business cycles correlation over the period 1980-2005. Thereafter, to check the robustness of the results, we add many control variables commonly described in the literature. We use three estimation techniques: pooled OLS, fixed vs. random effects as well as 2SLS estimations. Our main results suggest that while trade intensity may help to harmonize business cycles in Maghreb countries, the magnitude of this harmonization is lower than for industrial countries. Moreover, intra-industry trade causes a reverse -counterintuitive- effect. Many lessons are thereby learned.
|Date of creation:||15 Dec 2011|
|Date of revision:|
|Note:||View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00830053|
|Contact details of provider:|| Web page: https://hal.archives-ouvertes.fr/|
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.:
- Juan Sole & Gabriel Sensenbrenner & Amor Tahari & J. E. J. De Vrijer & Marina Moretti & Patricia D Brenner & Abdelhak S Senhadji, 2007. "Financial Sector Reforms and Prospects for Financial Integration in Maghreb Countries," IMF Working Papers 07/125, International Monetary Fund.
- Lionel Fontagné & Michael Freudenberg & Guillaume Gaulier, 2006.
"A Systematic Decomposition of World Trade into Horizontal and Vertical IIT,"
Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers)
- Lionel Fontagné & Michael Freudenberg & Guillaume Gaulier, 2006. "A Systematic Decomposition of World Trade into Horizontal and Vertical IIT," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 142(3), pages 459-475, October.
- Fidrmuc, Jarko, 2001. "The endogeneity of optimum currency area criteria, intraindustry trade and EMU enlargement," BOFIT Discussion Papers 8/2001, Bank of Finland, Institute for Economies in Transition.
- Mongelli, Francesco Paolo, 2002.
""New" views on the optimum currency area theory: what is EMU telling us?,"
Working Paper Series
0138, European Central Bank.
- Mongelli, Francesco Paolo, 2002. "ìNew" Views on the Optimum Currency Area Theory: What is EMU Telling US?," Royal Economic Society Annual Conference 2002 140, Royal Economic Society.
- Zsolt Darvas & György Szapáry, 2006.
"Business Cycle Synchronization in the Enlarged EU,"
0604, Department of Mathematical Economics and Economic Analysis, Corvinus University of Budapest.
- Chrysost Bangake & Aram Belhadj & Nabil Jedlane, 2007.
"Towards Maghreb Monetary Unification: What does the Theory and History Tell Us?,"
- Chrysost Bangake & Aram Belhadj & Nabil Jedlane, 2007. "Towards Maghreb Monetary Unification: What does the Theory and History Tell Us?," Post-Print halshs-00366754, HAL.
- Belhadj, Aam & bangake, Chrysost & Jedlane, NABIL, 2007. "Toward Maghreb monetary unification:what does the theory and history tell us?," MPRA Paper 40375, University Library of Munich, Germany.
- Jarko Fidrmuc, 2001.
"The Endogeneity of the Optimum Currency Area Criteria, Intraindustry Trade, and EMU Enlargement,"
LICOS Discussion Papers
10601, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Jarko Fidrmuc, 2004. "The Endogeneity of the Optimum Currency Area Criteria, Intra-industry Trade, and EMU Enlargement," Contemporary Economic Policy, Western Economic Association International, vol. 22(1), pages 1-12, 01.
- Lionel Fontagné & Michael Freudenberg, 1999. "Marché unique et développement des échanges," Économie et Statistique, Programme National Persée, vol. 326(1), pages 31-52.
- Peridy, Nicolas, 2005. "The trade effects of the Euro-Mediterranean partnership: what are the lessons for ASEAN countries?," Journal of Asian Economics, Elsevier, vol. 16(1), pages 125-139, February.
- Ben Hammouda, Hakim & Oulmane, Nassim & Bchir, Hédi & Sadni Jallab, Mustapha, 2006. "The Cost of non-Maghreb: Achieving the Gains from Economic Integration," MPRA Paper 13293, University Library of Munich, Germany.
- Paul de Grauwe & Francesco Paolo Mongelli, 2005.
"Endogeneities of Optimum Currency Areas: What brings Countries Sharing a Single Currency Closer together?,"
Working Papers de Economia (Economics Working Papers)
29, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro.
- De Grauwe, Paul & Mongelli, Francesco Paolo, 2005. "Endogeneities of optimum currency areas: what brings countries sharing a single currency closer together?," Working Paper Series 0468, European Central Bank.
- George S. Tavlas, 2009. "Optimum-Currency-Area Paradoxes," Review of International Economics, Wiley Blackwell, vol. 17(3), pages 536-551, 08.
- Boone, Laurence & Maurel, Mathilde, 1999. "An Optimal Currency Area Perspective of the EU Enlargement to the CEECs," CEPR Discussion Papers 2119, C.E.P.R. Discussion Papers.
- Alan C. Stockman, 1987.
"Sectoral and National Aggregate Disturbances to Industrial Output in Seven European Countries,"
NBER Working Papers
2313, National Bureau of Economic Research, Inc.
- Stockman, Alan C., 1988. "Sectoral and national aggregate disturbances to industrial output in seven European countries," Journal of Monetary Economics, Elsevier, vol. 21(2-3), pages 387-409.
When requesting a correction, please mention this item's handle: RePEc:hal:wpaper:halshs-00830053. 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: (CCSD)
If references are entirely missing, you can add them using this form.