From the Global to the National Cycle: An Intricate Liaison

33 Pages Posted: 6 Aug 2013

See all articles by M. Ayhan Kose

M. Ayhan Kose

World Bank; Brookings Institution; Centre for Economic Policy Research (CEPR); Australian National University (ANU)

Prakash Loungani

International Monetary Fund (IMF)

Marco E. Terrones

International Monetary Fund (IMF)

Date Written: August 2013

Abstract

This paper examines the linkages between the global business cycle and national cycles. We first analyse the evolution of the global business cycle and present its main properties during global recessions and recoveries. We then consider how the sensitivity of national cycles to the global cycle varies over different phases of the global cycle and depends on country‐specific features. Our findings collectively portray an intricate liaison between the global business cycle and national cycles. National business cycles are tightly linked to the global cycle, but the sensitivity of national cycles to the global cycle is much higher during global recessions than expansions. There are significant differences across countries in how they respond to the global cycle as advanced economies appear to be more sensitive to global recessions than are developing economies. Moreover, countries tend to be more sensitive to the global cycle, the more integrated they are to the global economy.

Suggested Citation

Kose, M. Ayhan and Loungani, Prakash and Terrones, Marco E., From the Global to the National Cycle: An Intricate Liaison (August 2013). Pacific Economic Review, Vol. 18, Issue 3, pp. 370-402, 2013. Available at SSRN: https://ssrn.com/abstract=2305512 or http://dx.doi.org/10.1111/1468-0106.12030

M. Ayhan Kose (Contact Author)

World Bank

1818 H Street, NW
Washington, DC 20433
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Brookings Institution

1775 Massachusetts Ave, NW
Washington, DC 20036
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Centre for Economic Policy Research (CEPR)

London
United Kingdom

Australian National University (ANU)

Canberra, Australian Capital Territory 2601
Australia

Prakash Loungani

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-7043 (Phone)
202-623-4740 (Fax)

Marco E. Terrones

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States
202-623-4329 (Phone)

HOME PAGE: http://imf.org/external/np/CV/AuthorCV.aspx?AuthID=171

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