Determinants of Business Cycle Comovement: A Robust Analysis

Marianne Baxter (mbaxter@bu.edu) and Michael Kouparitsas (michaelkouparitsas@gmail.com)

No 10725, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: F33 F41 (search for similar items in EconPapers)
Date: 2004-09
New Economics Papers: this item is included in nep-dge, nep-ifn and nep-mac
Note: EFG IFM
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Citations: View citations in EconPapers (62)

Published as Baxter, Marianne and Michael A. Kouparitsas. "Determinants Of Business Cycle Comovement: A Robust Analysis," Journal of Monetary Economics, 2005, v52(1,Jan), 113-157.

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Journal Article: Determinants of business cycle comovement: a robust analysis (2005)
Working Paper: Determinants of business cycle comovement: a robust analysis (2004)
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