What Are the Driving Forces of International Business Cycles?

Mario John Crucini (), Ayhan Kose () and Christopher Otrok ()

No 14380, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the driving forces of G-7 business cycles. We decompose national business cycles into common and nation-specific components using a dynamic factor model. We also do this for driving variables found in business cycle models: productivity; measures of fiscal and monetary policy; the terms of trade and oil prices. We find a large common factor in oil prices, productivity, and the terms of trade. Productivity is the main driving force, with other drivers isolated to particular nations or sub-periods. Along these lines, we document shifts in the correlation of the G-7 component of each driver with the overall G-7 cycle.

JEL-codes: E3 E32 F4 F41 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cba, nep-mac and nep-opm
Date: 2008-10
Note: IFM
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