International Capital Flows, Boom‐Bust Cycles, and Business Cycle Synchronization in the Asia Pacific Region

21 Pages Posted: 19 Jan 2013

See all articles by Soyoung Kim

Soyoung Kim

Seoul National University

Sunghyun Henry Kim

Sungkyunkwan University - Department of Economics

Date Written: January 2013

Abstract

This article documents evidence of business cycle synchronization in selected Asia Pacific countries since the 1990s. We explain business cycle synchronization by the channel of international capital flows and boom‐bust cycles. Using the vector auto‐regression method, we find that most Asian countries experience boom‐bust cycles following capital inflows, where the boom in output is mostly driven by consumption and investment. Empirical evidence also shows that capital flow shocks are positively correlated in the region, which supports the conclusion that capital market liberalization has contributed to business cycle synchronization.

JEL Classification: F4

Suggested Citation

Kim, Soyoung and Kim, Sunghyun Henry, International Capital Flows, Boom‐Bust Cycles, and Business Cycle Synchronization in the Asia Pacific Region (January 2013). Contemporary Economic Policy, Vol. 31, Issue 1, pp. 191-211, 2013, Available at SSRN: https://ssrn.com/abstract=2203283 or http://dx.doi.org/10.1111/j.1465-7287.2011.00285.x

Soyoung Kim (Contact Author)

Seoul National University ( email )

Kwanak-gu
Seoul, 151-742
Korea, Republic of (South Korea)
+82-2-880- 2689 (Phone)

Sunghyun Henry Kim

Sungkyunkwan University - Department of Economics ( email )

110-745 Seoul
Korea

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