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Title:How Does Globalization Affect the Synchronization of Business Cycles? PDF Logo
Authors:Kose, M. Ayhan
Prasad, Eswar
Terrones, Marco E.
Issue Date:2003
Series/Report no.:IZA Discussion paper series 702
Abstract:This paper examines the impact of rising trade and financial integration on international business cycle comovement among a large group of industrial and developing countries. The results provide at best limited support for the conventional wisdom that globalization has increased the degree of synchronization of business cycles. The evidence that trade and financial integration enhance global spillovers of macroeconomic fluctuations is mostly limited to industrial countries. One striking result is that, on average, cross-country consumption correlations have not increased in the 1990s, precisely when financial integration would have been expected to result in better risk-sharing opportunities, especially for developing countries.
Subjects:macroeconomic fluctuations
trade and financial integration
international transmission of shocks
JEL:E32
F42
F41
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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