Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110452
Authors: 
Fries, Claudia
Kappler, Marcus
Year of Publication: 
2015
Series/Report no.: 
ZEW Discussion Papers 15-031
Abstract: 
This study readdresses the determinants of business cycle synchronisation. We test, on the one hand, whether FDI promoting policies may have consequences for the business cycle comovement between countries, and on the other hand, whether more plausible identification strategies change previous results. Our results suggest that linkages through foreign direct investment contribute in most cases positively to the synchronisation between country pairs. In contrast, the beneficial effects of trade integration for the similarity of business cycles are less robust and thus less important for the transmission of idiosyncratic shocks between countries than previously thought. Finally, we find that larger differences in the sector structure between two economies result in a bigger gap between their business cycles.
Subjects: 
Business Cycle Synchronisation
FDI
Trade
Sectoral Differences
Panel
JEL: 
F21
F41
F44
F49
Document Type: 
Working Paper

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