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Trade, Financial Integration, and Synchronization of Business Cycles in NAFTA Member Countries (Integracja handlowa i finansowa a synchronizacja cykli koniunkturalnych w krajach czlonkowskich NAFTA)

Author

Listed:
  • Piotr Misztal

    (The Jan Kochanowski University (JKU) in Kielce, The Faculty of Management and Administration)

Abstract

The aim of the study was to analyze the impact of trade integration (international trade) and financial integration (international capital flows) on the synchronization of business cycles in member countries of the North American Free Trade Agreement (NAFTA) during the 1995–2013 period. Pursuant to the adopted hypothesis, international trade and international capital flows were significant factors in determining the degree of synchronization of business cycles in the examined integrated group. It was international trade that determined the convergence of business cycles in NAFTA to a most significant degree. This was consistent with the results of research carried out by J. Frankel and A. Rose (1998). Moreover, the influence of mutual trade and inter-country capital flows on the synchronization of business cycles of the countries depended on not only the intensity of trade and capital, but mainly on the structure of the trade and capital flows. The research results have important implications in terms of the formation and functioning of integration groups bringing together countries with different levels of economic development. The analysis results also play an important role in the context of the future Polish membership in the euro area. The results of this research have important implications with respect to the formation and functioning of integrated groups bringing together countries of differing levels of economic development. Analysis results also play an important role in the context of the future Polish membership in the euro zone.

Suggested Citation

  • Piotr Misztal, 2016. "Trade, Financial Integration, and Synchronization of Business Cycles in NAFTA Member Countries (Integracja handlowa i finansowa a synchronizacja cykli koniunkturalnych w krajach czlonkowskich NAFTA)," Research Reports, University of Warsaw, Faculty of Management, vol. 1(20), pages 88-100.
    • Handle: RePEc:sgm:resrep:v:1:i:20:y:2016:p:88-100
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    File URL: http://www.sim.wz.uw.edu.pl/sites/default/files/artykuly/piotr_misztal.pdf
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    References listed on IDEAS

    as
    1. Calderon, Cesar & Chong, Alberto & Stein, Ernesto, 2007. "Trade intensity and business cycle synchronization: Are developing countries any different?," Journal of International Economics, Elsevier, vol. 71(1), pages 2-21, March.
    2. Boldrin, Michele & Levine, David K., 2001. "Growth Cycles and Market Crashes," Journal of Economic Theory, Elsevier, vol. 96(1-2), pages 13-39, January.
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    More about this item

    Keywords

    foreign trade; foreign investment; business cycle;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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