BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 11/2009:
The impact of the global financial crisis on business cycles in Asian emerging economies
Iikka Korhonen ()
and Jarko Fidrmuc
Abstract: We analyze the transmission of global financial crisis to
business cycles in China and India. The pattern of business cycles in
emerging Asian economies generally displays a low degree of synchronization
with the OECD countries, which is consistent with the decoupling
hypothesis. By contrast, however, the current financial crisis has had a
significant effect on economic developments in emerging Asian economies.
Applying dynamic correlations, we find wide differences for different
frequencies of cyclical development. More specifically, at business cycle
frequencies, dynamic correlations are typically low or negative, but they
are also influenced most by the global financial crisis. Finally, we find a
significant link between trade ties and dynamic correlations of GDP growth
rates in emerging Asian countries and OECD countries.
Keywords: financial crisis; business cycles; decoupling; trade; dynamic correlation; (follow links to similar papers)
JEL-Codes: E32; F15; F41; (follow links to similar papers)
29 pages, August 4, 2009
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