Gains from Synchronization

William Barnett () and Mehmet Serhat Dalkır

No 200511, WORKING PAPERS SERIES IN THEORETICAL AND APPLIED ECONOMICS from University of Kansas, Department of Economics

Abstract: This paper investigates the transmission mechanisms of noise and volatility between economies through trade links, and the effects of synchronization on business cycles. We investigate the transmission of outside noise and the fluctuations that the noise generates. We identify conditions under which international economic links reduce the economic output noise emanating from noise within the individual economies. Under certain conditions, devaluation of a country's currency causes reduction in the business cycle noise and volatility as seen by that country's exporters, while increased valuation of a country's currency produces higher noise and volatility, as seen by the country's importers.

Keywords: business cycles; synchronization; international trade; stochastic systems (search for similar items in EconPapers)
JEL-codes: D5 D9 E (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
Date: Written
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Related works:
Working Paper: Gains from Synchronization (2005)
Journal Article: Gains from Synchronization (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:kan:wpaper:200511

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