Open AccessBilateral Trade Intensity and Business Cycle Synchronization Nexus: An Analysis from Major Trading Partners of Pakistan
Author(s) -
Masooma Batool,
Nabila Asghar
Publication year - 2021
Publication title -
review of economics and development studies
Language(s) - English
Resource type - Journals
eISSN - 2519-9706
pISSN - 2519-9692
DOI - 10.47067/reads.v7i2.353
Subject(s) - nexus (standard) , business cycle , bilateral trade , synchronization (alternating current) , context (archaeology) , economics , convergence (economics) , international economics , divergence (linguistics) , monetary economics , estimation , business , international trade , macroeconomics , china , computer science , political science , geography , computer network , channel (broadcasting) , linguistics , philosophy , management , archaeology , embedded system , law
The existing research on the relationship between bilateral trade and business cycle synchronization (BCS) is limited in the context of developing countries like Pakistan. Theoretically, bilateral trade can lead to convergence as well as divergence of business cycles depending upon prevailing economic conditions in a country. The present study is an attempt to explore the relationship between bilateral trade and business cycle synchronization in Pakistan. For empirical analysis, data of six major trading partners of Pakistan is collected for the period 1991-2017 and multidimensional fixed effect estimation technique has been used. The results of the study show that bilateral trade has significant and positive impact on BCS. The coordination of fiscal and monetary policies appear to be significant determinants of GDP synchronization. These results have strong implications for policymakers and practitioners for formulating and implementing policies for Pakistan to get the maximum benefits of BCS.