Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88523
Authors: 
Agnello, Luca
Caporale, Guglielmo Maria
Sousa, Ricardo M.
Year of Publication: 
2013
Series/Report no.: 
DIW Discussion Papers 1339
Abstract: 
Using a panel of annual data for 20 countries we show that synchronized fiscal consolidation (stimulus) programmes in different countries make their business cycles more closely linked, especially in the case of fiscal adjustments lasting 2 or 3 years. We also find: (i) little evidence of decoupling when an inflation targeting regime is unilaterally adopted; (ii) an increase in business cycle synchronization when countries fix their exchange rates and become members of a monetary union; (iii) a positive effect of bilateral trade on the synchronization of business cycles.
Subjects: 
fiscal consolidation
fiscal stimulus
business cycle synchronization
JEL: 
C41
E62
Document Type: 
Working Paper

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