Gains from Synchronization

William Barnett and Mehmet Dalkır

Studies in Nonlinear Dynamics & Econometrics, 2007, vol. 11, issue 1, 30

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

Date: 2007
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Working Paper: Gains from Synchronization (2005)
Working Paper: Gains from Synchronization (2005)
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DOI: 10.2202/1558-3708.1323

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