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Trade Integration and Business Cycle Synchronization

A Reappraisal with Focus on Asia

By: Mr.Romain A Duval,Mr.Kevin C. Cheng,Kum Hwa Oh,Richa Saraf,MissDulani Seneviratne

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Trade Integration and Business Cycle Synchronization

A Reappraisal with Focus on Asia

By: Mr.Romain A Duval,Mr.Kevin C. Cheng,Kum Hwa Oh,Richa Saraf,MissDulani Seneviratne

This paper reexamines the relationship between trade integration and business cycle synchronization (BCS) using new value-added trade data for 63 advanced and emerging economies during 1995–2012. In a panel framework, we identify a strong positive impact of trade intensity on BCS—conditional on various controls, global common shocks and country-pair heterogeneity—that is absent when gross trade data are used. That effect is bigger in crisis times, pointing to trade as an important crisis propagation mechanism. Bilateral intra-industry trade and trade specialization correlation also appear to increase co-movement, indicating that not only the intensity but also the type of trade matters. Finally, we show that dependence on Chinese final demand in value-added terms amplifies the international spillovers and synchronizing impact of growth shocks in China.

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Page Count

46

Publisher

International Monetary Fund

Published Date

ISBN 10

1475522460

ISBN 13

9781475522464

Trade Integration and Business Cycle Synchronization

A Reappraisal with Focus on Asia

By: Mr.Romain A Duval,Mr.Kevin C. Cheng,Kum Hwa Oh,Richa Saraf,MissDulani Seneviratne

Write a review Read reviews Take a Quiz Solve Book Puzzle

Trade Integration and Business Cycle Synchronization

A Reappraisal with Focus on Asia

By: Mr.Romain A Duval,Mr.Kevin C. Cheng,Kum Hwa Oh,Richa Saraf,MissDulani Seneviratne

This paper reexamines the relationship between trade integration and business cycle synchronization (BCS) using new value-added trade data for 63 advanced and emerging economies during 1995–2012. In a panel framework, we identify a strong positive impact of trade intensity on BCS—conditional on various controls, global common shocks and country-pair heterogeneity—that is absent when gross trade data are used. That effect is bigger in crisis times, pointing to trade as an important crisis propagation mechanism. Bilateral intra-industry trade and trade specialization correlation also appear to increase co-movement, indicating that not only the intensity but also the type of trade matters. Finally, we show that dependence on Chinese final demand in value-added terms amplifies the international spillovers and synchronizing impact of growth shocks in China.

Average ratings

N/A

5

0%

4

0%

3

0%

2

0%

1

0%

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Age

Page Count

46

Publisher

International Monetary Fund

Published Date

ISBN 10

1475523599

ISBN 13

9781475523591