Trade and business cycle synchronization in OECD countries: A re-examination

Robert Inklaar, Richard Jong-A-Pin, Jakob de Haan*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

156 Citations (Scopus)
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Abstract

This paper re-examines the relationship between trade intensity and business cycle synchronization for 21 OECD countries in the period 1970-2003. Instead of using instrumental variables, we estimate a multivariate model including variables capturing specialization and similarity of economic policies. We confirm that trade intensity affects synchronization, but the effect is much smaller than previously reported. Other factors, like specialization and convergence in monetary and fiscal policies, have a similar impact on business cycle synchronization as trade intensity. The effect of trade on synchronization is not driven by outliers. However, the impact of trade on synchronization is not robust across deciles. (C) 2007 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)646-666
Number of pages21
JournalEuropean Economic Review
Volume52
Issue number4
DOIs
Publication statusPublished - May-2008

Keywords

  • business cycles
  • trade
  • synchronization of business cycles
  • QUANTILE REGRESSION
  • SPECIALIZATION
  • ECONOMETRICS
  • INTEGRATION
  • INDUSTRIAL
  • GROWTH

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