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Trade intensity and business cycle synchronization: East Asia versus Europe

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  • Rana, Pradumna Bickram
  • Cheng, Tianyin
  • Chia, Wai-Mun

Abstract

This paper provides a comparative analysis of the relationship between trade intensities and synchronization of business cycles in East Asia and Europe (EU-15). It extends the work of Shin and Wang (2004, 2005) by providing a comparative perspective between East Asia and Europe. The paper finds that intra-industry trade, rather than inter-industry trade, is the major factor in explaining business cycle co-movements in both regions. The paper also supports the hypothesis that the relationship between trade intensity and output co-movement is stronger in East Asia than in Europe. The major policy implication of this finding is that East Asia needs to further strengthen macroeconomic policy coordination within the region.

Suggested Citation

  • Rana, Pradumna Bickram & Cheng, Tianyin & Chia, Wai-Mun, 2012. "Trade intensity and business cycle synchronization: East Asia versus Europe," Journal of Asian Economics, Elsevier, vol. 23(6), pages 701-706.
    • Handle: RePEc:eee:asieco:v:23:y:2012:i:6:p:701-706
    DOI: 10.1016/j.asieco.2011.11.003
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    References listed on IDEAS

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    8. Kwanho Shin & Yunjong Wang, 2005. "The Impact of Trade Integration on Business Cycle Co-Movements in Europe," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 141(1), pages 104-123, April.
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    Cited by:

    1. Solomon Abayomi Olakojo, 2018. "Foreign Trade and International Financial Flows: Implications for Economic Stability in the Selected ECOWAS Countries," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 22(1), pages 63-103, Winter.
    2. N. Antonakakis & G. Tondl, 2014. "Does integration and economic policy coordination promote business cycle synchronization in the EU?," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 41(3), pages 541-575, August.
    3. Masahito Ambashi & Fusanori Iwasaki & Keita Oikawa, 2021. "Prediction Errors of Macroeconomic Indicators and Economic Shocks for ASEAN Member States," Working Papers DP-2022-02, Economic Research Institute for ASEAN and East Asia (ERIA).
    4. Krzysztof Beck & Ntokozo Patrick Nzimande, 2023. "Labor mobility and business cycle synchronization in Southern Africa," Economic Change and Restructuring, Springer, vol. 56(1), pages 159-179, February.
    5. Chunjiao Yu & Ren Zhang & Lian An & Zhixing Yu, 2020. "Has China’s Belt and Road Initiative Intensified Bilateral Trade Links between China and the Involved Countries?," Sustainability, MDPI, vol. 12(17), pages 1-19, August.
    6. Yu, Chunjiao & Zhao, Jiaqi & Cheng, Shixiong, 2023. "GVC trade and business cycle synchronization between China and belt-road countries," Economic Modelling, Elsevier, vol. 126(C).
    7. Yoshihiro Hashiguchi & Norihiko Yamano & Colin Webb, 2017. "Economic shocks and changes in global production structures: Methods for measuring economic resilience," OECD Science, Technology and Industry Working Papers 2017/09, OECD Publishing.
    8. Beck, Krzysztof, 2021. "Why business cycles diverge? Structural evidence from the European Union," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    9. Masahito Ambashi & Fusanori Iwasaki & Keita Oikawa, 2022. "Prediction Errors of Macroeconomic Indicators and Economic Shocks for ASEAN Member States, 1990-2021," KIER Working Papers 1088, Kyoto University, Institute of Economic Research.
    10. Emmanouil Karakostas, 2022. "The Effects of Protectionism on the Exports of the Trade Partners: A Composite Index," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 15(1), pages 58-70, July.
    11. Sin Yee Lee & Zulkefly Abdul Karim & Norlin Khalid & Mohd Azlan Shah Zaidi, 2022. "The Spillover Effects of Chinese Shocks on the Belt and Road Initiative Economies: New Evidence Using Panel Vector Autoregression," Mathematics, MDPI, vol. 10(14), pages 1-18, July.
    12. Wanping Yang & Bingyu Zhao, 2021. "The Transmission Mechanism of China-Japan Economic Co-Movement and Stabilizing Measures for China’s Economy," SAGE Open, , vol. 11(1), pages 21582440211, March.
    13. Shinya Fukui, 2020. "Business Cycle Spatial Synchronization: Measuring a Synchronization Parameter," Discussion Papers 2009, Graduate School of Economics, Kobe University.
    14. Saudi Arabian Monetary Authority, 2018. "Macroeconomic and distributional effects of globalisation," BIS Papers chapters, in: Bank for International Settlements (ed.), Globalisation and deglobalisation, volume 100, pages 311-319, Bank for International Settlements.

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    More about this item

    Keywords

    Economic integration; Trade intensity; Intra-industry trade; Business cycle synchronization; East Asia;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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