How Does Globalization Affect the Synchronization of Business Cycles?

Abstract

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Changing Nature of North-South Linkages: Stylized Facts and Explanations

“…For Latin America, however, they document that the country specific components to be more dominant owing to the fact that 4 Their methodology closely follows the one in Kose, Otrok, and Whiteman (2003) who decompose the volatility in output, consumption, and investment into the world, region, country, and idiosyncratic components using a sixty-country sample over the 1960-90 period. 5 Several other researchers find relatively stronger business cycle co-movement among developed economies using factor models (see Whiteman, 2007 andCanova, Ciccarelli, andOrtega, 2007) or simple correlations (see Kose, Prasad, and Terrones, 2003).…”

Measuring the determinants of business cycle synchronization using a panel approach

“…But, liquidity constraints, imperfect information or regulatory limits to capital flows (indicators of poor financial integration) may lead foreign investors to withdraw capital, reducing investment, GDP and the cross-correlations with other countries. Imbs (2004Imbs ( , 2006 finds that more financially integrated countries are more synchronous (the second effect seems to be dominant) and Kose et al (2003) find that financially open developing economies have synchronized cycles with the G7 countries.…”

Transformation of the Capital Market Stability Model under the Influence of the Financial Globalization

“…There is evidence that the integration of trade and industry processes have a stronger impact on the finance sphere than consumption (Kose, Prasad, & Terrones, 2003). On the one hand, there was blurring of the banks from traditional financial institutions into new more diversified structures.…”