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The First Global Recession in Decades

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  • Jean Imbs

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEPR - Center for Economic Policy Research)

Abstract

This paper uses monthly data on industrial production to estimate the distribution of international business cycle correlations since the 1980s, with a focus on the current turmoil. The degree of international correlation in national business cycles since the end of 2008 is unprecedented in three decades. Since December 2008, there has been a sizable and significant upward shift in the cross-sectional distribution of cycles synchronization, especially between advanced economies. The magnitude of the shift is unprecedented in recent history, even relative to what happened following 1973 after alternative shocks with worldwide consequences. The shift does not arise because volatilities changed with the crisis. Both goods and assets trade have contributed to this synchronization. The (large and significant) synchronization among OECD economies is associated with financial openness. The (weaker) diffusion among developing economies tends to happen between trade partners.

Suggested Citation

  • Jean Imbs, 2010. "The First Global Recession in Decades," PSE-Ecole d'économie de Paris (Postprint) hal-00612515, HAL.
    • Handle: RePEc:hal:pseptp:hal-00612515
    DOI: 10.1057/imfer.2010.13
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    More about this item

    Keywords

    International Business Cycle; Sub-Prime Crisis; Trade Linkages; Financial Linkages;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F15 - International Economics - - Trade - - - Economic Integration
    • 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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