Co-movements Of Business Cycles In The Maghreb: Does Trade Matter?

Aam Belhadj and Jude Eggoh ()

MPRA Paper from University Library of Munich, Germany

Abstract: Over the past two decades, the Maghreb Countries have initiated a liberalization process characterized by increasing trade flows and they have strengthened economic and financial linkages between their economies. In this paper, we demonstrate how co-movements of outputs would respond to this integration process. The nature of this relationship seems to be important for these countries because the decision to join an economic and monetary union would depend on how the union affects trade and co-movements. To this end, we estimate a panel model describing the effect of trade intensity on business cycles correlation over the period 1980-2005. Thereafter, to check the robustness of the results, we add many control variables commonly described in the literature. We use three estimation techniques: pooled OLS, fixed vs. random effects as well as 2SLS estimations. Our main results suggest that while trade intensity may help to harmonize business cycles in Maghreb countries, the magnitude of this harmonization is lower than for industrial countries. Moreover, intra-industry trade causes a reverse –counterintuitive- effect. Many lessons are thereby learned.

Keywords: Business Cycles; Trade Intensity; Intra-Industry Trade; Maghreb (search for similar items in EconPapers)
JEL-codes: E32 F15 F41 F43 (search for similar items in EconPapers)
Date: 2010-07-30
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Related works:
Working Paper: Co-Movements of Business Cycles in the Maghreb: Does Trade Matter? (2011)
Working Paper: Co-movements of business cycles in the Maghreb: Does trade matter? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:35778

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