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Gail Cohen, João Tovar Jalles, Mr. Prakash Loungani, and Ricardo Marto

Front Matter Page Research Department Contents 1. Introduction 2. Literature Review 3. Data and Framework 3.1 Data 3.2 Econometric framework 4. Results 4.1 Cyclical and trend elasticities 4.2 Determinants of cross-country differences 4.3 Changes in trend elasticities over time 5. Conclusions References List of Figures 1a: Response of emissions growth to output growth, top 20 emitters 1b: Italy’s case: time profile of real GDP growth and emissions growth, 1990-2014 2: Trends and Cycles in Emissions and

Gail Cohen, João Tovar Jalles, Mr. Prakash Loungani, Ricardo Marto, and Mr. Chris Papageorgiou

clearer evidence of decoupling in richer nations, particularly in European countries, but not yet in emerging markets. The trend elasticities range in value from -0.6 to 1.2. For six countries, including Italy, the elasticities are either essentially zero or negative, suggesting that the trend component of emissions has decoupled from the trend component in output. We then apply the framework to consider the effects of international trade on the emissions-output elasticities. International trade “gives a mechanism for consumers to shift environmental pollution to

Gail Cohen, João Tovar Jalles, Mr. Prakash Loungani, and Ricardo Marto
Gail Cohen, João Tovar Jalles, Mr. Prakash Loungani, and Ricardo Marto
For the world's 20 largest emitters, we use a simple trend/cycle decomposition to provide evidence of decoupling between greenhouse gas emissions and output in richer nations, particularly in European countries, but not yet in emerging markets. If consumption-based emissions—measures that account for countries' net emissions embodied in cross-border trade—are used, the evidence for decoupling in the richer economies gets weaker. Countries with underlying policy frameworks more supportive of renewable energy and climate change mitigation efforts tend to show greater decoupling between trend emissions and trend GDP, and for both production- and consumption-based emissions. The relationship between trend emissions and trend GDP has also become much weaker in the last two decades than in preceding decades.
Mr. Shaun K. Roache

Front Matter Page Authorized for distribution by Dominique Desruelle Contents I. Introduction II. Stylized Facts A. Trade Linkages B. Financial Linkages C. Remittances III. Literature Review A. Central America Linkages B. Common Business Cycles IV. Data and Methodology A. Data B. The Common Cycles Method V. Results A. Growth Correlations B. Four Common Trends and Three Common Cycles C. Trends and Cycle Decomposition D. Cyclical Correlations E. Cyclical and Trend Elasticities to the United States F

Mr. Serkan Arslanalp, Fabian Bornhorst, Mr. Sanjeev Gupta, and Ms. Elsa Sze

stock Production function, technology index is non-linear function of infrastructure and time trend Elasticity for infrastructure is 0.27 Everaert (2003) Belgian regions 1953-96 (A) Public capital stock VECM Output elasticity of public capital is 0.14, which is only a fraction (0.4) of output elasticity of private capital Ferrara & Marcellino (2000) Italy, total and per region 1970-94 Public capital stock Cobb-Douglas production function with physical capital stocks as separate input Italy: Negative output elasticity in the

Shaun K. Roache

: Average Correlation of Cyclical GDP Component to the United States - Comparison of Methods 1/ Source: Author’s calculations 1/ The methods include first-differenced log values, the first difference of the cyclical component from the Hodrick-Prescott filter, and the first difference of the common cycle factor recovered from the Vahid and Engle (1993) decomposition. E. Cyclical and Trend Elasticities to the United States In our sample, we reasonably assume that we have one truly exogenous cycle, that of the United States (ignoring, for now, the

Mr. Shaun K. Roache
The economies of Central America share a close relationship with the United States, with considerable comovement of GDP growth over a long period of time. Trade, the financial sector, and remittance flows are all potential channels through which the U.S. cycle could affect the region. But just how dependent is growth in the region on the U.S.? Using the common cycles method of Vahid and Engle (1993), this paper suggests that the business cycle is dominated by the U.S.; region-specific growth drivers tend to be long-lasting shocks, rather than temporary fluctuations. The most cyclically sensitive countries include Costa Rica, El Salvador, and Honduras.
Mr. Andrew J Swiston

cyclical elasticity is 0.5, and the average trend elasticity is 0.1. However, interpretation of the overall elasticity with respect to U.S. activity is complicated by the decomposition of growth into its cyclical and trend components, and the large contribution of trend growth to volatility casts some uncertainty on the interpretation of the decomposition. Overall, these studies have found that synchronization among the countries of the region is moderate, but does not rise to the levels seen for more highly integrated areas, such as within the Euro Zone or between

Mr. Abdul d Abiad, Petia Topalova, and Ms. Prachi Mishra
We analyze trade dynamics following past episodes of financial crises. Using an augmented gravity model and 179 crisis episodes from 1970-2009, we find that there is a sharp decline in a country’s imports in the year following a crisis-19 percent, on average-and this decline is persistent, with imports recovering to their gravity-predicted levels only after 10 years. In contrast, exports of the crisis country are not adversely affected, and they remain close to the predicted level in both the short and medium-term.