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China and the World economy: Wavelet spectrum analysis of business cycles

  • Pomenková, Jitka



  • Fidrmuc, Jarko



  • Korhonen, Iikka



We employ a wavelet spectrum analysis to study globalization and business cycles in China and G7 countries. The co-movement synchronization between G7 countries and China is shown to have undergone frequent and large changes during our sample period. The co-movements for business cycle frequencies are generally different from those for other frequencies, and synchronization with China’s business cycle differs as between G7 countries. In recent years Japan, Germany and Italy seem to have the closest synchronization at business-cycle frequency. We find a significant relationship between the time-varying wavelet measure of synchronization and trade only for business-cycle frequencies. The co-movements at longer frequencies are negatively related to trade, so that the overall co-movements and trade tend not to be significantly related.

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Paper provided by Bank of Finland, Institute for Economies in Transition in its series BOFIT Discussion Papers with number 5/2014.

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Length: 22 pages
Date of creation: 27 Jan 2014
Date of revision:
Publication status: Published as Pomenková, Jitka, Jarko Fidrmuc and Iikka Korhonen, 'Wavelet Spectrum Analysis of Business Cycles of China and G7 Countries' in Applied Economics Letters, 2014, pages 1309-1313.
Handle: RePEc:hhs:bofitp:2014_005
Contact details of provider: Postal: Bank of Finland, BOFIT, P.O. Box 160, FI-00101 Helsinki, Finland
Phone: + 358 10 831 2268
Fax: + 358 10 831 2294
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  1. Fidrmuc, Jarko & Batorova, Ivana, 2008. "China in the World Economy: Dynamic Correlation Analysis of Business Cycles," Working Paper Series RP2008/02, World Institute for Development Economic Research (UNU-WIDER).
  2. Alessandra Iacobucci, 2003. "Spectral Analysis for Economic Time Series," Documents de Travail de l'OFCE 2003-07, Observatoire Francais des Conjonctures Economiques (OFCE).
  3. Christophe Croux & Mario Forni & Lucrezia Reichlin, 2001. "A measure of co-movement for economic variables: theory and empirics," ULB Institutional Repository 2013/10139, ULB -- Universite Libre de Bruxelles.
  4. Chi Gong & Soyoung Kim, 2013. "Economic Integration and Business Cycle Synchronization in Asia," Asian Economic Papers, MIT Press, vol. 12(1), pages 76-99, March.
  5. Jeffrey A. Frankel & Andrew K. Rose, 1996. "The Endogeneity of the Optimum Currency Area Criteria," NBER Working Papers 5700, National Bureau of Economic Research, Inc.
  6. 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.
  7. Çigdem Akin & M. Ayhan Kose, 2007. "Changing Nature of North-South Linkages: Stylized Facts and Explanations," IMF Working Papers 07/280, International Monetary Fund.
  8. Aguiar-Conraria, LuI´s & Joana Soares, Maria, 2011. "Business cycle synchronization and the Euro: A wavelet analysis," Journal of Macroeconomics, Elsevier, vol. 33(3), pages 477-489, September.
  9. Andrew Hughes Hallett & Christian Richter, 2009. "Economics in the Backyard: How Much Convergence is there between China and her Special Regions?," The World Economy, Wiley Blackwell, vol. 32(6), pages 819-861, 06.
  10. Andrew Hughes Hallett & Christian Richter, 2011. "Is there clustering among the Eurozone economies? Evidence from how the EU's New Member States are converging," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 14(2), pages 127-150.
  11. Patrick M. Crowley, 2007. "A Guide To Wavelets For Economists ," Journal of Economic Surveys, Wiley Blackwell, vol. 21(2), pages 207-267, 04.
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