Does debt market integration amplify the international transmission of business cycles during financial crises?

International business cycle synchronization: A synthetic assessment

“…Two main factors can generate international business cycle synchronization: common global shocks and bilateral spillovers of idiosyncratic shocks from one economy to another (Cesa-Bianchi, Imbs, and Saleheen 2019). While some studies investigate the nature of shocks and focus on those that propagate cross-border spillover impacts, we maintain that shocks can transmit through various channels simultaneously (An, Kim, and Pyun 2021). Among them, previous studies note three major channels: bilateral trade, bilateral FDI, and bilateral portfolio investment.…”

“…The novel features of this study are as follows: First, while there have been empirical studies on each of trade, FDI, and portfolio integration and their impact on output comovement (e.g., Dées and Zorell 2012;Abiad et al 2013;Davis 2014;Fries and Kappler 2015;Cesa-Bianchi, Imbs, and Saleheen 2019;An, Kim, and Pyun 2021), we synthetically analyze the effects of three competing channels on business cycle synchronization, with a wide range of samples for 72 economies during 2010-2019, after the global financial crisis. Second, to the extent of our knowledge, there has been no study assessing the differential impacts of detailed trade, FDI, and financial linkages in a unified framework: intermediate input trade vs. final goods trade; greenfield FDI vs. crossborder M&A; and equity vs. long-and short-term debt.…”

International Business Cycle Synchronization: A Synthetic Assessment

“…Two main factors can generate international business cycle synchronization: common global shocks and bilateral spillovers of idiosyncratic shocks from one economy to another (Cesa-Bianchi, Imbs, and Saleheen 2019). While some studies investigate the nature of shocks and focus on those that propagate cross-border spillover impacts, we maintain that shocks can transmit through various channels simultaneously (An, Kim, and Pyun 2021). Among them, previous studies note three major channels: bilateral trade, bilateral FDI, and bilateral portfolio investment.…”

“…The novel features of this study are as follows: First, while there have been empirical studies on each of trade, FDI, and portfolio integration and their impact on output comovement (e.g., Dées and Zorell 2012;Abiad et al 2013;Davis 2014;Fries and Kappler 2015;Cesa-Bianchi, Imbs, and Saleheen 2019;An, Kim, and Pyun 2021), we synthetically analyze the effects of three competing channels on business cycle synchronization, with a wide range of samples for 72 economies during 2010-2019, after the global financial crisis. Second, to the extent of our knowledge, there has been no study assessing the differential impacts of detailed trade, FDI, and financial linkages in a unified framework: intermediate input trade vs. final goods trade; greenfield FDI vs. crossborder M&A; and equity vs. long-and short-term debt.…”

Bagaimana Utang Mendorong Terjadinya Krisis? Solusi dari Sistem Keuangan Islam

“…Keterkaitan jumlah uang beredar dengan ekonomi riil yang diilustrasikan dalam literatur konvensional sebagai kebijakan moneter. Keputusan yang diambil oleh bank sentral ditransmisikan pada harga dan aktivitas melalui berbagai saluran seperti: suku bunga, kredit bank (An et al, 2021). Tanpa disadari keberadaan bunga ini memberikan fatamorgana terhadap perekonomian riil.…”