The Sources of Fluctuations within and Across Countries
FRB Kansas City Research Working Paper No. 98-04
85 Pages Posted: 9 Feb 1999
Date Written: September 1998
Abstract
This paper reviews the evidence on the sources of business cycles within and across countries and the implications for the importance of borders in business cycles. A simple econometric model is presented and applied to within-U.S. and cross-country data in order to provide a framework for interpreting the literature. Using these estimates as a benchmark, data issues, alternative models, and still other approaches to quantifying sources of comovement are surveyed. Overall, the evidence suggests three general conclusions. First, common shocks are less important in international fluctuations than in within-country fluctuations. Second, region-specific shocks account for a larger share of variation in international data than in within-country data. Finally, industry-specific shocks, measured accurately, are a smaller source of variation internationally than within countries. The paper then argues that lowering economic borders among nations through pacts like EMU should make the sources of international fluctuations look somewhat more like the sources of within-country fluctuations, although the effects are uncertain.
JEL Classification: E32, F41, F42
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Shocking Aspects of European Monetary Unification
By Tamim Bayoumi and Barry Eichengreen
-
International Business Cycles: World, Region, and Country-Specific Factors
By M. Ayhan Kose, Chris Otrok, ...
-
Understanding Changes in International Business Cycle Dynamics
By James H. Stock and Mark W. Watson
-
Trade, Finance, Specialization and Synchronization
By Jean M. Imbs
-
Trade, Finance, Specialization and Synchronization
By Jean M. Imbs
-
Trade, Finance, Specialization, and Synchronization
By Jean M. Imbs
-
Risk Sharing and Industrial Specialization: Regional and International Evidence
By Bent E. Sørensen, Sebnem Kalemli-ozcan, ...
-
Sectoral and National Aggregate Disturbances to Industrial Output in Seven European Countries