Does International Trade Really Lead to Business Cycle Synchronization? A Panel Data Approach
15 Pages Posted: 1 Mar 2011
Abstract
In this paper we re-estimate the correlation between trade and business cycle synchronization. Different from other previous studies, we use long-run GDP and trade data and use the GDP cross-correlation index la Cerqueira and Martins (Economics Letters, Vol. 102 (2009), pp. 106-108) rather than overtime cross-correlations. We find a positive impact of trade on business cycle synchronization particularly in the current wave of globalization, although the interwar period sees negative impacts. The current economic integration and currency unions also positively affect business cycle synchronization.
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Does International Trade Really Lead to Business Cycle Synchronization? A Panel Data Approach
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