IMF Working Papers Volume 2003 Issue 027: How Does Globalization Affect the Synchronization of Business Cycles? (2003)

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How Does Globalization Affect the Synchronization of Business Cycles?

Author:

Mr. Ayhan Kose

Mr. Ayhan Kose
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Mr. Eswar S Prasad

Mr. Eswar S Prasad
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Mr. Marco Terrones

Mr. Marco Terrones
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Series:: IMF Working Papers

Volume/Issue:: Volume 2003: Issue 027

Language:: English

Publication Date:: 04 Mar 2003

DOI:: https://doi.org/10.5089/9781451844542.001

ISBN:: 9781451844542

ISSN:: 1018-5941

Pages:: 14

Keywords:: WP; output; GDP; consumption correlation; Macroeconomic fluctuations; trade and financial integration; output and consumption comovement; trade openness; terms of trade volatility; consumption fluctuation; business cycle correlation; trade linkage; world output; consumption risk; consumption growth; Business cycles; Consumption; Financial integration; Capital flows; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Series:: IMF Working Papers

Volume/Issue:: Volume 2003: Issue 027

Language:: English

Publication Date:: 04 Mar 2003

DOI:: https://doi.org/10.5089/9781451844542.001

ISBN:: 9781451844542

ISSN:: 1018-5941

Pages:: 14

Keywords:: WP; output; GDP; consumption correlation; Macroeconomic fluctuations; trade and financial integration; output and consumption comovement; trade openness; terms of trade volatility; consumption fluctuation; business cycle correlation; trade linkage; world output; consumption risk; consumption growth; Business cycles; Consumption; Financial integration; Capital flows; Global

Legal-disclaimer:: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

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This paper examines the impact of rising trade and financial integration on international business cycle comovement among a large group of industrial and developing countries. The results provide at best limited support for the conventional wisdom that globalization has increased the degree of synchronization of business cycles. The evidence that trade and financial integration enhance global spillovers of macroeconomic fluctuations is stronger for industrial countries. One striking result is that, on average, cross-country consumption correlations have not increased in the 1990s, precisely when financial integration would have been expected to result in better risk-sharing opportunities, especially for developing countries.

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IMF Working Papers

ISSN:: 1018-5941

Publisher:: International Monetary Fund

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