Ties that bind: bilateral trade's role in synchronizing business cycles

Ananth Ramanarayanan ()

Economic Letter, 2009, vol. 4, issue jan, No 1

Abstract: For most of the past year, economies in all parts of the world have been weakening--from outright recessions in the U.S. and parts of Europe to sharply slower growth in China, India and other emerging economies. The pattern provides the latest example of international business-cycle synchronization--the tendency for countries to experience macroeconomic fluctuations of similar timing and magnitude. ; While today's synchronization isn't unusual, it raises questions about the forces that transmit economic fluctuations from one country to another. An important factor to consider is international trade. Over long periods of time, countries with deeper trade ties are more closely synchronized. This occurs even though trade with any particular partner makes up a fairly small part of economic activity in most countries.

Keywords: International trade; Business cycles (search for similar items in EconPapers)
Date: 2009
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