Regionalization vs. Globalization

Hideaki Hirata, Ayhan Kose and Christopher Otrok

No 2013/019, IMF Working Papers from International Monetary Fund

Abstract: Abstract: Both global and regional economic linkages have strengthened substantially over the past quarter century. We employ a dynamic factor model to analyze the implications of these linkages for the evolution of global and regional business cycles. Our model allows us to assess the roles played by the global, regional, and country-specific factors in explaining business cycles in a large sample of countries and regions over the period 1960–2010. We find that, since the mid-1980s, the importance of regional factors has increased markedly in explaining business cycles especially in regions that experienced a sharp growth in intra-regional trade and financial flows. By contrast, the relative importance of the global factor has declined over the same period. In short, the recent era of globalization has witnessed the emergence of regional business cycles.

Keywords: WP; regional factor; factor loading; global factor; variance share; Business cycles; Comovement; Synchronization; Trade linkages; Financial linkages; business cycle synchronization; world business cycle; business cycle comovement; business cycle correlation; Consumption; Factor models; Trade balance; Global; North America; Europe; Asia and Pacific; North Africa (search for similar items in EconPapers)
Pages: 65
Date: 2013-01-22
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Citations: View citations in EconPapers (50)

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Related works:
Working Paper: Regionalization vs. Globalization (2013)
Working Paper: Regionalization vs. Globalization (2013)
Working Paper: Regionalization vs. globalization (2013)
Working Paper: Regionalization vs. Globalization (2013)
Working Paper: Regionalization vs. Globalization
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