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Has globalization increased the synchronicity of international business cycles?

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  • Berge, Travis

Abstract

The past 30 years have been witness to an inexorable change in the degree to which economies are connected internationally. At the same time, the 2007-2008 recession was the first ‘global recession’ in decades. This article explores how international trade and cross-border holdings financial assets impact the synchronization of business cycles internationally. The paper begins by producing chronologies of business cycle turning points for a group of 32 major economies covering 40 years of history. With these chronologies in hand, we document the degree of bilateral business cycle synchronization, relating cross-country differences in synchronization to bilateral trade and financial linkages. The analysis confirms that countries with deep trade linkages tend to experience similar business cycle fluctuations. However, we find no such relationship for financial linkages.

Suggested Citation

  • Berge, Travis, 2012. "Has globalization increased the synchronicity of international business cycles?," MPRA Paper 42392, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:42392
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    Cited by:

    1. Agnieszka Domańska & Dobrmił Serwa, 2014. "Synchronizacja cykli koniunkturalnych a podatność gospodarek krajów Europy na skutki kryzysu gospodarczego 2008-2009," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 37.
    2. Andreas Brunhart, 2015. "The Swiss Business Cycle and the Lead of Small Neighbor Liechtenstein," Arbeitspapiere 51, Liechtenstein-Institut.
    3. Jang Tae-Seok, 2020. "Animal spirits in an open economy: an interaction-based approach to the business cycle," The B.E. Journal of Macroeconomics, De Gruyter, vol. 20(1), pages 1-16, January.
    4. Travis J. Berge & Guangye Cao, 2014. "Global effects of U.S. monetary policy: is unconventional policy different?," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 5-31.
    5. Pierre L. Siklos, 2020. "Looking into the Rear-View Mirror: Lessons from Japan for the Eurozone and the U.S?," IMES Discussion Paper Series 20-E-02, Institute for Monetary and Economic Studies, Bank of Japan.
    6. Maxwell Hartt, 2018. "The diversity of North American shrinking cities," Urban Studies, Urban Studies Journal Limited, vol. 55(13), pages 2946-2959, October.
    7. Lillie Lam & James Yetman, 2013. "Asia's Decoupling: Fact, Fairytale or Forecast?," Pacific Economic Review, Wiley Blackwell, vol. 18(3), pages 321-344, August.
    8. Gaggl, Paul & Kaufmann, Sylvia, 2020. "The cyclical component of labor market polarization and jobless recoveries in the US," Journal of Monetary Economics, Elsevier, vol. 116(C), pages 334-347.
    9. Andreas Brunhart, 2017. "Are Microstates Necessarily Led by Their Bigger Neighbors’ Business Cycle? The Case of Liechtenstein and Switzerland," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 13(1), pages 29-52, May.
    10. Lillie Lam & James Yetman, 2013. "Asia’s decoupling: fact, forecast or fiction?," BIS Working Papers 438, Bank for International Settlements.

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    More about this item

    Keywords

    Globalization; international business cycle synchronization;

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance

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