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Regionalization vs. Globalization
Author:
Mr. Hideaki Hirata null

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,
Mr. Ayhan Kose
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Mr. Christopher Otrok
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Series:
IMF Working Papers
Volume/Issue:
Volume 2013: Issue 019
Language:
English
Publication Date:
22 Jan 2013
DOI:
https://doi.org/10.5089/9781557753281.001
ISBN:
9781557753281
ISSN:
1018-5941
Pages:
65
Keywords:
WP; regional factor; factor loading; global factor; variance share; Business cycles; Comovement; Synchronization; Trade linkages; Financial linkages; business cycle synchronization; world business cycle; business cycle comovement; business cycle correlation; Consumption; Factor models; Trade balance; Global; North America; Europe; Asia and Pacific; North Africa
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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Abstract: Both global and regional economic linkages have strengthened substantially over the past quarter century. We employ a dynamic factor model to analyze the implications of these linkages for the evolution of global and regional business cycles. Our model allows us to assess the roles played by the global, regional, and country-specific factors in explaining business cycles in a large sample of countries and regions over the period 1960–2010. We find that, since the mid-1980s, the importance of regional factors has increased markedly in explaining business cycles especially in regions that experienced a sharp growth in intra-regional trade and financial flows. By contrast, the relative importance of the global factor has declined over the same period. In short, the recent era of globalization has witnessed the emergence of regional business cycles.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund