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Trade Integration and Business Cycle Synchronization :, A Reappraisal with Focus on Asia, Romain Duval, Kevin Cheng, Kum Hwa Oh, Richa Saraf

This paper reexamines the relationship between trade integration and business cycle synchronization (BCS) using new value-added trade data for 63 advanced and emerging economies during 1995–2012. In a panel framework, we identify a strong positive impact of trade intensity on BCS—conditional on various controls, global common shocks and country-pair heterogeneity—that is absent when gross trade data are used. That effect is bigger in crisis times, pointing to trade as an important crisis propagation mechanism. Bilateral intra-industry trade and trade specialization correlation also appear to increase co-movement, indicating that not only the intensity but also the type of trade matters. Finally, we show that dependence on Chinese final demand in value-added terms amplifies the international spillovers and synchronizing impact of growth shocks in China
Table Of Contents
Cover; Contents; I. Introduction; II. Stylized Facts about Business Cycle Synchronization; A. Properties of Business Cycle Synchronization in Asia; B. The Role of Global, Regional and Sub-regional Factors; III. The Role of Trade in Driving BCS; A. A Bird's Eye View of the Literature; B. Methodology; C. Results; D. Interpretation; E. An Additional Model: Assessing China Spillovers; IV. Concluding Remarks and Policy Implications; References; Appendixes; I. Further Details about the Dynamic Factor Analysis; II. Further Details on the Data; III. Robustness for Econometrics-Using Four Periods
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (47 p.)
Specific Material Designation
Form Of Item

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