Global Business Cycles: Convergence or Decoupling?

Kose, Ayhan; Prasad, Eswar; Otrok, Christopher

doi:10.5089/9781451870015.001

Cited by 155 publications

(219 citation statements)

References 45 publications

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“…This result is at odds with the observations of Frankel and Rose (1998), as especially China has significant trade ties with major developed countries. Kose et al (2008) show that there is some degree of business-cycle convergence within the groups of countries (emerging economies and industrial countries), whereas they cannot confirm convergence between the two groups. Bátorová et al (2008) show that the low level of business cycle correlation is likely due to trade specialization of emerging economies in specific industries or production phases (especially intermediate products).…”

Section: Moving Correlations Of International Businessmentioning

confidence: 91%

“…Iwatsubo and Ogawa (2009) Richter (2008) analyse the declining importance of the USA for Asia. Kose et al (2008) find that there has been a convergence of business cycles within the OECD countries and within the emerging markets (including non-Asian countries) but a decoupling of business cycles between these two groups.…”

Section: International Transmission Of Business Cyclesmentioning

confidence: 93%

“…Despite the globalization trend, business cycles in industrial countries and emerging Asian economies have so far remained largely independent of each other. This is referred to as decoupling of business cycles in the recent literature (see Kose et al, 2008, Akin and Kose, 2008, He et al, 2007. Nevertheless, recent developments since the onset of the global financial crisis in the second half of 2008 show that also these countries are not autonomous.…”

Section: Introductionmentioning

confidence: 99%

“…Among others, a special issue of the World Economy was devoted to this issue (see de Grauwe and Zhang, 2006). However, there are only a handful of papers dealing with the synchronization of business cycles in developed countries with those in emerging economies, and these (see Hughes Hallett andRichter, 2008, andKose et al, 2008) often concentrate on description of stylized facts of business cycles in various regions. This paper extends the discussion by analyzing the determinants of business cycle convergence and divergence between OECD countries and the two largest emerging economies in Asia (often referred as the Asian giants).…”

Section: Introductionmentioning

confidence: 99%

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The impact of the global financial crisis on business cycles in Asian emerging economies

Fidrmuc

Korhonen

2010

Journal of Asian Economics

142

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We analyze the transmission of global financial crisis to business cycles in China and India. The pattern of business cycles in emerging Asian economies generally displays a low degree of synchronization with the OECD countries, which is consistent with the decoupling hypothesis. By contrast, however, the current financial crisis has had a significant effect on economic developments in emerging Asian economies. Applying dynamic correlations, we find wide differences for different frequencies of cyclical development. More specifically, at business cycle frequencies, dynamic correlations are typically low or negative, but they are also influenced most by the global financial crisis. Finally, we find a significant link between trade ties and dynamic correlations of GDP growth rates in emerging Asian countries and OECD countries. Terms of use: Documents inJEL Code: E32, F15, F41.

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Section: Moving Correlations Of International Businessmentioning

confidence: 91%

Section: International Transmission Of Business Cyclesmentioning

confidence: 93%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The impact of the global financial crisis on business cycles in Asian emerging economies

Fidrmuc

Korhonen

2010

Journal of Asian Economics

142

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“…Following Kose, Otrok and Prasad (2008), business cycles have converged among the groups of advanced and emerging market economies, respectively. Since the weight of the global factor has declined, there is cyclical convergence within each group, but higher divergence between them.…”

Section: Introductionmentioning

confidence: 99%

Does the economic integration of China affect growth and inflation in industrial countries?

Dreger

Zhang

2014

Economic Modelling

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The Chinese economic development affects GDP growth and inflation in the advanced countries. A GVAR approach is used to model the interdependencies between the business cycles in China and industrial countries, including the US, the euro area and Japan. For robustness, the results are compared to those obtained by leading structural econometric models, such as NiGEM and OEF. Evidence is based on the responses to a Chinese shock stemming from the recent fiscal stimulus package. The results indicate that the impact on GDP growth in the advanced economies is substantial for the Asian region. The expansionary effects to the US and the euro area responses are much lower and decrease due to rising inflation pressure. The analysis also reveals that China is still highly vulnerable to shocks in industrial countries, including the government debt crisis in the euro area. Terms of use: Documents in JEL:E32, F15, C51 Keywords: GVAR, Chinese integration, shock transmission, euro area debt crisis

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Monetary policy trilemma, inflation targeting and global financial crisis

Gülşen

Özmen

2019

Int. J Fin Econ

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We empirically investigate the validity of the monetary policy trilemma postulation for emerging market (EME) and advanced (AE) economies under different exchange rate and monetary policy regimes before and after the recent global financial crisis (GFC). Consistent with the dilemma proposition, domestic interest rates are determined by global financial conditions and the FED rate even under floating exchange rate regimes (ERR) in the long‐run. The impact of the FED rates is higher in EME than AE and EME are much more sensitive to global financial cycle under managed than floating ERR. The spillover from the FED rate substantially increases after the GFC in EME with floating ERR and AE. The results from the monetary policy reaction functions based on equilibrium correction mechanism specifications suggest that domestic interest rates respond to inflation and output gaps especially under inflation targeting (IT) in the short‐run. The response to inflation gap tends to be smaller in IT AE after the GFC.

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Global Business Cycles: Convergence or Decoupling?

Cited by 155 publications

References 45 publications

The impact of the global financial crisis on business cycles in Asian emerging economies

The impact of the global financial crisis on business cycles in Asian emerging economies

Does the economic integration of China affect growth and inflation in industrial countries?

Monetary policy trilemma, inflation targeting and global financial crisis

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