Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272776 
Year of Publication: 
2022
Series/Report no.: 
ADB Economics Working Paper Series No. 668
Publisher: 
Asian Development Bank (ADB), Manila
Abstract: 
We synthetically assess the three major transmission channels of international business cycles: bilateral trade, foreign direct investment (FDI), and portfolio investment flows between economies with multiple fixed effects. Using the data of 72 economies during 2010-2019, we find that real and financial integration generates heterogeneous impacts on business cycle comovement. Trade integration, particularly through intermediate input trade, drives business cycle synchronization. We also find greenfield FDI leads business cycle comovements. This may be due to deepening intra-industry trade and dense global value chains. Higher debt market integration is also associated with more synchronized business cycle comovement, implying that balance sheet effects and the related credit cycle can exert influence on business cycle comovements. However, equity integration leads to business cycle divergence, suggesting that cross-border equity holdings may help stabilize transmission of a foreign economy's shocks.
Subjects: 
business cycle synchronization
trade
FDI
portfolio investment
JEL: 
F15
F21
F34
F44
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Working Paper

Files in This Item:
File
Size
450.79 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.