The Impact of Trade Integration on Business Cycle Synchronization for Mercosur Countries

Francesco Grigoli ()

European Journal of Comparative Economics, 2012, vol. 9, issue 1, 103-131

Abstract: This paper intends to evaluate empirically the impact of reduced trade barriers and increased trade on the synchronization of business cycles. It draws on Frankel and Rose (1998) who reassessed the Mundellian criteria on Optimum Currency Areas (OCAs) and considered their application to be untenable given that trade integration and cycle synchronization may be endogenous. This research aims to test this hypothesis for Mercosur countries. Using a quarterly panel dataset spanning the members since the establishment of the free trade area (FTA) in 1991 until 2008, the empirical findings indicate a positive effect, implying intra-industry trade

Keywords: Trade Integration; Business Cycle Synchronization; Mercosur (search for similar items in EconPapers)
JEL-codes: E32 F15 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:liu:liucej:v:9:y:2012:i:1:p:103-131

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