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Institute for Economies in Transition, Bank of Finland BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland

No 5/2014:
China and the World economy: Wavelet spectrum analysis of business cycles

Jitka Pomenková (), Jarko Fidrmuc () and Iikka Korhonen ()

Abstract: We employ a wavelet spectrum analysis to study globalization and business cycles in China and G7 countries. The co-movement synchronization between G7 countries and China is shown to have undergone frequent and large changes during our sample period. The co-movements for business cycle frequencies are generally different from those for other frequencies, and synchronization with China’s business cycle differs as between G7 countries. In recent years Japan, Germany and Italy seem to have the closest synchronization at business-cycle frequency. We find a significant relationship between the time-varying wavelet measure of synchronization and trade only for business-cycle frequencies. The co-movements at longer frequencies are negatively related to trade, so that the overall co-movements and trade tend not to be significantly related.

Keywords: globalization; business cycles; synchronization; trade; wavelet analysis; (follow links to similar papers)

JEL-Codes: E32; F15; F41; (follow links to similar papers)

22 pages, January 27, 2014

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This paper is published as:
Pomenková, Jitka, Jarko Fidrmuc and Iikka Korhonen, (2014), 'Wavelet Spectrum Analysis of Business Cycles of China and G7 Countries', Applied Economics Letters, Vol. 21, No. 18, pages 1309-1313

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