World Cycles Revisited: Diverging Trends in Prices and Quantities

Antoine Camous, Eric Monnet and Damien Puy

Working papers from Banque de France

Abstract: We revisit evidence on world cycles using a new quarterly macro-financial dataset covering a broad set of countries from 1950 to the COVID-19 crisis. By filling historical data gaps, we show that previous studies overstated the influence of global factors on national GDP and credit fluctuations. Our central finding is a novel disconnect: asset prices have become increasingly synchronized under financial globalization, whereas output synchronization has remained low and stable. We propose a parsimonious model in which deeper financial integration raises risk-sharing and asset-price co-movement while encouraging riskier, less correlated production structures, thereby reconciling the observed patterns.

Keywords: World Cycles; Business Cycles; Financial Cycles; Financial Integration; Trade Integration; Globalization. (search for similar items in EconPapers)
JEL-codes: E32 F41 F42 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2016
New Economics Papers: this item is included in nep-his, nep-int, nep-pr~, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (23)

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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:592

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