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Business Cycles Synchronicity and Income Levels: Has Globalisation Brought us Closer Than Ever?
Author(s) -
Jean Louis Rosmy,
Simons Daniel
Publication year - 2014
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12074
Subject(s) - synchronicity , business cycle , economics , openness to experience , consumption (sociology) , per capita income , globalization , international business , synchronization (alternating current) , per capita , monetary economics , macroeconomics , econometrics , market economy , psychology , social psychology , social science , philosophy , topology (electrical circuits) , demography , mathematics , management , epistemology , combinatorics , sociology , population
Research on business cycle linkages shows a tendency to model countries of relatively the same income levels jointly. However, the issue of whether these countries move along the same business cycles has not been formally investigated in the literature. In this paper, we take this approach and investigate whether each group of countries follows its own dynamics and is therefore subjected to the same business cycle and whether these cycles are independent of each other across income groups. Results indicate that high income per capita countries ( HIC s) tend to be guided by stronger similarity in business cycles than countries in the middle ( MIC s) and low income ( LIC s) groups. In search for an explanation of the business cycles synchronicity observed, panel data analysis was explored. The results from the robust fixed effects estimation show neither trade openness nor shocks to consumption underlie international business cycle synchronization, but rather shocks to oil prices.