Trade Integration and Business Cycle Synchronization : A Reappraisal with Focus on Asia /

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 vari...

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Bibliographic Details
Main Author: Duval, Romain
Other Authors: Cheng, Kevin, Hwa Oh, Kum, Saraf, Richa
Format: Journal
Language:English
Published: Washington, D.C. : International Monetary Fund, 2014.
Series:IMF Working Papers; Working Paper ; No. 2014/052
Online Access:Full text available on IMF
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520 3 |a 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. 
538 |a Mode of access: Internet 
700 1 |a Cheng, Kevin. 
700 1 |a Hwa Oh, Kum. 
700 1 |a Saraf, Richa. 
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