The Few Leading the Many: Foreign Affiliates and Business Cycle Comovement

Joern Kleinert (), Julien Martin and Farid Toubal

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Abstract: This paper argues that the correlation of business cycles across countries is largely due to linkages between multinational firms and their foreign affiliates. There are very few foreign affiliates in France, but they contribute considerably to aggregate economic activities. We exploit the heterogeneity in the presence and origin of foreign affiliates across French regions to identify their impact on comovement. We find a positive impact of foreign affiliates' presence on the comovement of business cycles between their regions of location and their countries of origin. This effect is not primarily driven by foreign affiliates' trade with their countries of origin.

Keywords: business cycles; foreign affiliates (search for similar items in EconPapers)
Date: 2015-10
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Citations: View citations in EconPapers (30)

Published in American Economic Journal: Macroeconomics, 2015, 7 (4), pp.134-159. ⟨10.1257/mac.20130234⟩

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Related works:
Journal Article: The Few Leading the Many: Foreign Affiliates and Business Cycle Comovement (2015)
Working Paper: The Few Leading the Many: Foreign Affiliates and Business Cycle Comovement (2015)
Working Paper: The Few Leading the Many: Foreign Affiliates and Business Cycle Comovement (2012)
Working Paper: The Few Leading The Many: Foreign Affiliates and Business Cycle Comovement (2012)
Working Paper: The few leading the many: foreign affiliates and business cycle comovement (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01306646

DOI: 10.1257/mac.20130234

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