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Mapping the Global Business Cycle Network

Author

Listed:
  • Amalia Repele

    (Bocconi University)

  • Sébastien Waelti

    (Swiss National Bank)

Abstract

We build a weighted network of business cycle similarities across countries and assess its main quantitative properties. Business cycle similarity is measured at the annual frequency using the Euclidean distance. Network analysis is well suited to map the full set of pairwise similarities at an annual frequency. We find that the global business cycle network has become more dense and more homogeneous over time, reflecting global trends such as rising trade and financial integration. At the same time, similarity exhibits a jagged pattern, underscoring the importance of also taking into account short-term factors to explain the dynamics of global business cycle interdependence. Unlike earlier studies focused on aggregate measures of similarity, our empirical approach is able to uncover and assess both the long-term trend rise and the short-term pattern of business cycle similarity.

Suggested Citation

  • Amalia Repele & Sébastien Waelti, 2021. "Mapping the Global Business Cycle Network," Open Economies Review, Springer, vol. 32(4), pages 739-760, September.
    • Handle: RePEc:kap:openec:v:32:y:2021:i:4:d:10.1007_s11079-020-09615-1
    DOI: 10.1007/s11079-020-09615-1
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    Cited by:

    1. Mao Takongmo, Charles-O. & Touré, Adam, 2023. "Trade openness and connectedness of national productions: Do financial openness, economic specialization, and the size of the country matter?," Economic Modelling, Elsevier, vol. 125(C).
    2. Zeeshan Nezami Ansari & Md Mustafa & Rajendra Narayan Paramanik, 2024. "Linkages of International Business Cycle: An Euclidean Distance-Based Network Approach," Economic Research Guardian, Mutascu Publishing, vol. 14(2), pages 163-175, December.

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    More about this item

    Keywords

    Business cycle; Network analysis; Weighted network; Similarity; Euclidean distance;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F44 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Business Cycles
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts

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