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Does International Trade Really Lead to Business Cycle Synchronization?-A panel data approach

  • Michael Artis

    (Swansea University, UK)

  • Toshihiro Okubo

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

This paper re-estimates the correlation between trade and business cycle synchronization. Different from other previous studies, we employ long-run GDP and trade data and use the GDP cross-correlation index a la Cerqueira and Martins (2009) rather than over-time cross-correlations. We find a positive impact of trade on business cycle synchronization particularly in the current wave of globalization, although the inter-war period sees negative impacts. The current economic integration and currency unions also positively affect business cycle synchronization.

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Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2011-05.

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Length: 17 pages
Date of creation: Jan 2011
Date of revision:
Handle: RePEc:kob:dpaper:dp2011-05
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  1. Inklaar, Robert & Jong-A-Pin, Richard & de Haan, Jakob, 2008. "Trade and business cycle synchronization in OECD countries--A re-examination," European Economic Review, Elsevier, vol. 52(4), pages 646-666, May.
  2. Richard E. Baldwin & Philippe Martin, 1999. "Two Waves of Globalisation: Superficial Similarities, Fundamental Differences," NBER Working Papers 6904, National Bureau of Economic Research, Inc.
  3. Michael Artis & Toshihiro Okubo, 2008. "Globalization and Business Cycle Transmission," Centre for Growth and Business Cycle Research Discussion Paper Series 110, Economics, The Univeristy of Manchester.
  4. Rose, Andrew K, 1999. "One Money, One Market: Estimating the Effect of Common Currencies on Trade," CEPR Discussion Papers 2329, C.E.P.R. Discussion Papers.
  5. Michael J. Artis & Toshihiro Okubo, 2011. "Business Cycle, Currency and Trade, Revisited," Keio/Kyoto Joint Global COE Discussion Paper Series 2011-019, Keio/Kyoto Joint Global COE Program.
  6. César Calderón & Alberto Chong & Ernesto Stein, 2002. "Trade Intensity and Business Cycle Synchronization: Are Developing Countries Any Different?," Working Papers Central Bank of Chile 195, Central Bank of Chile.
  7. Jean Imbs, 2004. "Trade, Finance, Specialization and Synchronization," Post-Print hal-00612588, HAL.
  8. Torsten Persson, 2001. "Currency unions and trade: how large is the treatment effect?," Economic Policy, CEPR;CES;MSH, vol. 16(33), pages 433-462, October.
  9. 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.
  10. Andrew K. Rose & Eric van Wincoop, 2001. "National Money as a Barrier to International Trade: The Real Case for Currency Union," American Economic Review, American Economic Association, vol. 91(2), pages 386-390, May.
  11. Kyoji Fukao & Debin Ma & Tangjun Yuan, 2006. "Real GDP in Pre-War East Asia: A 1934-36 Benchmark Purchasing Power Parity Comparison with the U.S," Hi-Stat Discussion Paper Series d05-132, Institute of Economic Research, Hitotsubashi University.
  12. 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.
  13. Cerqueira, Pedro André & Martins, Rodrigo, 2009. "Measuring the determinants of business cycle synchronization using a panel approach," Economics Letters, Elsevier, vol. 102(2), pages 106-108, February.
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