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Globalization and Business Cycle Transmission

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  • Michael Artis

    (Institute for Political and Economic Governance, Manchester University, UK)

  • Toshihiro Okubo

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

The paper uses long-run GDP data for developed countries drawn from Maddison (2003) to generate deviation cycles for the period from 1870 to 2001. The cyclical deviates are examined for their bilateral cross-correlation values in three separate periods, those of the first globalization wave (1870 to 1914), the period of the "bloc economy" (1915 to 1959) and for the period of the second globalization (1960-2001). Cluster analysis is applied and the McNemar test is used to test for the relative coherence of alternative groupings of countries in the three periods. The bloc economy period emerges as one that features some well-defined sub-global clusters, where the second globalization period does not, the first globalization period lying between the two in this respect. The second globalization period shows a generally higher level of cross correlations and a lower variance than the other two periods. The features uncovered suggest that the second globalization period is indeed one that comprises a more inclusive world economy than ever before.Length: 29 pages

Suggested Citation

  • Michael Artis & Toshihiro Okubo, 2008. "Globalization and Business Cycle Transmission," Discussion Paper Series 232, Research Institute for Economics & Business Administration, Kobe University.
  • Handle: RePEc:kob:dpaper:232
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    1. repec:eee:ecofin:v:44:y:2018:i:c:p:278-288 is not listed on IDEAS
    2. Sebastian Florian Enea & Silvia Palaºcã, 2012. "Globalization Versus Segregation - Business Cycles Synchronization In Europe," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4(4), pages 668-692, December.
    3. Haroon Mumtaz & Saverio Simonelli & Paolo Surico, 2011. "International Comovements, Business Cycle and Inflation: a Historical Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(1), pages 176-198, January.
    4. Correa-López Mónica & de Blas Beatriz, 2012. "International Transmission of Medium-Term Technology Cycles: Evidence from Spain as a Recipient Country," The B.E. Journal of Macroeconomics, De Gruyter, vol. 12(1), pages 1-52, November.
    5. Michael J. Artis & Toshihiro Okubo, 2012. "Business Cycle, Currency And Trade, Revisited," Pacific Economic Review, Wiley Blackwell, vol. 17(1), pages 160-180, February.
    6. 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, September.
    7. Michael Artis & Toshihiro Okubo, 2011. "Does International Trade Really Lead To Business Cycle Synchronization?—A Panel Data Approach," Manchester School, University of Manchester, vol. 79(2), pages 318-332, March.
    8. Michael Artis & Christian Dreger & Konstantin Kholodilin, 2009. "Common and spatial drivers in regional business cycles," Centre for Growth and Business Cycle Research Discussion Paper Series 118, Economics, The Univeristy of Manchester.
    9. David Matesanz Gomez & Guillermo J. Ortega & Benno Torgler, 2011. "Measuring globalization: A hierarchical network approach," CREMA Working Paper Series 2011-11, Center for Research in Economics, Management and the Arts (CREMA).
    10. repec:jes:wpaper:y:2012:v:4:p:668-692 is not listed on IDEAS
    11. Silvia Palasca & Elisabeta Jaba, 2014. "Leading and Lagging Indicators Of the Economic Crisis," Romanian Statistical Review, Romanian Statistical Review, vol. 62(3), pages 31-47, September.
    12. Belke, Ansgar & Rees, Andreas, 2009. "The Importance of Global Shocks for National Policy Makers - Rising Challenges for Central Banks," Ruhr Economic Papers 135, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    13. Beckmann, Joscha & Belke, Ansgar & Czudaj, Robert, 2014. "Does global liquidity drive commodity prices?," Journal of Banking & Finance, Elsevier, vol. 48(C), pages 224-234.
    14. Shehzad, Choudhry Tanveer & De Haan, Jakob, 2013. "Was the 2007 crisis really a global banking crisis?," The North American Journal of Economics and Finance, Elsevier, vol. 24(C), pages 113-124.
    15. David Matesanz Gomez & Benno Torgler & Guillermo J. Ortega, 2013. "Measuring Global Economic Interdependence: A Hierarchical Network Approach," The World Economy, Wiley Blackwell, vol. 36(12), pages 1632-1648, December.

    More about this item

    Keywords

    Globalization; Bloc economy; Business cycle; Cluster analysis; McNemar test;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F15 - International Economics - - Trade - - - Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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