International Business Cycle Synchronization: A Synthetic Assessment
Publication | August 2022
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This paper presents findings from a study that synthetically assessed the three major transmission channels of international business cycles: trade, foreign direct investment (FDI), and portfolio flows between economies with multiple fixed effects.
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Results showed that real and financial integration generates heterogeneous impacts on business cycle comovement. Trade integration and greenfield FDI lead business cycle comovements, likely due to deepening intra-industry trade and dense global value chains. Higher debt market integration is associated with more synchronized business cycle comovement, while equity integration leads to business cycle divergence.
Contents
- Introduction
- Literature Review
- Data and Empirical Specification
- Estimation Results
- Conclusion
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