The myth of decoupling

Sébastien Wälti
Authors registered in the RePEc Author Service: Sébastien Waelti

MPRA Paper from University Library of Munich, Germany

Abstract: This paper casts light on the ongoing debate about whether emerging markets have decoupled from advanced economies. The proponents of the decoupling hypothesis argue that emerging markets have made significant progress in reducing external vulnerabilities, strengthening domestic policy frameworks, and achieving stronger domestic demand growth, thereby leading to lower business cycle comovements with advanced economies. This view runs against extensive empirical evidence showing that globalization, namely rising trade and financial integration, raises business cycle synchronisation. We find that decoupling is a myth: business cycle synchronicity between emerging markets and advanced economies has generally not declined in recent years.

Keywords: business cycle; synchronisation; globalisation; decoupling; emerging markets (search for similar items in EconPapers)
JEL-codes: E32 F15 F36 F41 (search for similar items in EconPapers)
Date: 2009-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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