Institutions and Business Cycles

Abstract:     
This paper investigates the relationship between the main business cycles features and the institutional and structural characteristics of countries in which they are observed. Using the nonparametric Harding-Pagan approach, we derive the business cycle characteristics of 63 countries that includes industrial, emerging and formerly centrally planned economies from all continents. Our analysis reveals that institutional factors have significant associations with the main business cycle characteristics. In addition, we examine the determinants of business cycle synchronization for the countries in our sample. In contrast to earlier studies which seek to account for such synchronization using gravity arguments as well as trade intensity and bilateral financial linkages only, we also consider the proximity of their institutional and policy environments.

Number of Pages in PDF File: 31

Keywords: Institutions, business cycles, synchronization, nonparametric analysis

JEL Classification: C32, E32, E37

working papers series