Comovement in GDP Trends and Cycles Among Trading Partners

Bruce Blonigen, Jeremy Piger and Nicholas Sly

No 18032, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: It has long been recognized that business cycle comovement is greater between countries that trade intensively with one another. Surprisingly, no one has previously examined the relationship between trade intensity and comovement of shocks to the trend level of output. Contrary to the result for cyclical fluctuations, we find that comovement of shocks to trend levels of real GDP is significantly weaker among countries that trade intensively with one another. We also find that the influence of trade on comovement between shocks to trends has remained stable, or become stronger in recent decades, while the role of trade in generating cyclical comovement has diminished steadily over time. In short, we find that international trade relationships have a substantial impact on comovement of shocks to output trends across countries, and these effects stand in stark contrast to the conventional wisdom regarding cyclical comovement.

JEL-codes: C22 E32 F42 (search for similar items in EconPapers)
Date: 2012-05
New Economics Papers: this item is included in nep-int
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Citations: View citations in EconPapers (1)

Published as “Comovement in GDP Trends and Cycles among Trading Partners” with Bruce Blonigen and Nicholas Sly, Journal of International Economics, forthcoming.

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Journal Article: Comovement in GDP trends and cycles among trading partners (2014)
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