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Determinants of business cycle comovement: a robust analysis

Marianne Baxter () and Michael Kouparitsas ()

No WP-04-14, Working Paper Series from Federal Reserve Bank of Chicago

Abstract: This paper investigates the determinants of business cycle comovement between countries. Our dataset includes over 100 countries, both developed and developing. We search for variables that are ?robust? in explaining comovement, using the approach of Leamer (1983). Variables considered are (i) bilateral trade between countries; (ii) total trade in each country; (iii) sectoral structure; (iv) similarity in export and import baskets; (v) factor endowments; and (vi) gravity variables. We find that bilateral trade is robust. However, two variables that the literature has argued are important for business cycles - industrial structure and currency unions - are found not to be robust.

Keywords: Business cycles; Trade (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-mac
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Journal Article: Determinants of business cycle comovement: a robust analysis (2005) Downloads
Working Paper: Determinants of Business Cycle Comovement: A Robust Analysis (2004) Downloads
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