BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 17/2012:
No coupling, no decoupling, only mutual inter-dependence: Business cycles in emerging vs. mature economies
Pierre L. Siklos ()
Abstract: Even before the events of the past few years, economists
and policy makers were musing about the apparent contradiction between
globalization, as it is generally understood, and the seemingly different
paths in overall economic activity taken by the emerging and more mature
economies of the world. The present paper reconsiders whether it is, in
fact, useful to think of correlations in business cycle movements as
reflecting some form of coupling or decoupling and, instead, suggests that,
even if business cycles may well have become more synchronous for a time,
it is more useful to think of international business cycle co-movements as
reflecting their mutual dependence that can be subjected to short-run
interruptions or affected by a variety of other economic factors. I report
evidence based on factor-augmented quantile regressions for a panel of
annual data since 1980 from 9 regions of the world. A panel is used to
estimate the common factors which are then applied to the quantile
regression model to determine the sources of business cycle co-movements
across countries and regions of the world.
Keywords: business cycles; quantile regression; panel estimation; factor model; coupling; decoupling; (follow links to similar papers)
JEL-Codes: C21; C22; C23; E32; (follow links to similar papers)
38 pages, September 3, 2012
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