An investigation of co-movements among the growth rates of the G-7 countries

Brian Doyle () and Jon Faust ()

Federal Reserve Bulletin, 2002, vol. 88, issue Oct, 427-437

Abstract: Early in 2000, after a decade of economic expansion, growth began to slow simultaneously in the large, advanced economies known as the Group of Seven (G-7)--Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The general slide in GDP growth fueled speculation that a period was emerging in which broad movements in the economies of the industrialized countries would be more closely linked. Proponents of this view argued that greater trade in goods and financial markets was leading to a greater synchronization of national economies. A rise in the co-movement of GDP among countries would have important implications for the making of national economic policies. Governments, for example, would need to take closer account of forecasts for conditions abroad in formulating forecasts for their domestic economies. The authors find, first, that the degree to which enhanced trade and financial linkages might be expected to increase the co-movement, or correlation, of economic growth among countries is far from clear. Then, examining the period from 1970 to the first quarter of 2002, the authors find that, indeed, the estimated correlation of growth across the G-7 has been higher in the current downturn than during the expansion of the 1990s. Rather than signaling a future of permanently higher synchronization, however, the rise is shown to be typical of business cycles over the past thirty years. Furthermore, estimates of correlation have not yet reached the peaks attained after earlier recessions. Overall, despite many changes in the international economy, the evidence does not reveal the arrival of a permanently higher correlation of growth rates among the G-7.

Keywords: Economic development; Group of Seven countries (search for similar items in EconPapers)
JEL-codes: F43 O47 (search for similar items in EconPapers)
Date: 2002
References: Add references at CitEc
Citations: View citations in EconPapers (46)

Downloads: (external link)
http://www.federalreserve.gov/pubs/bulletin/2002/1002lead.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgrb:y:2002:i:oct:p:427-437:n:v.88no.10

Ordering information: This journal article can be ordered from

DOI: 10.17016/bulletin.2002.88-10

Access Statistics for this article

More articles in Federal Reserve Bulletin from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().