International Capital Flows and Boom-Bust Cycles in the Asia Pacific Region

Henry Kim, Soyoung Kim and Yunjong Wang
Authors registered in the RePEc Author Service: Sunghyun Henry Kim ()

No 506, Discussion Papers Series, Department of Economics, Tufts University from Department of Economics, Tufts University

Abstract: This paper documents evidence of business cycle synchronization in selected Asia Pacific countries in the 1990s. We explain business cycle synchronization by the channel of international capital flows. Using the VAR method, we find that most Asian countries experience boom-bust cycles following capital inflows, where the boom in output is mostly driven by consumption and investment. Empirical evidence shows that capital flows in the region are highly correlated, which supports the conclusion that capital market liberalization has contributed to business cycle synchronization in Asia. We also find that business cycles in the Asian crisis countries are highly synchronized with those in Japan.

Keywords: business cycle synchronization; capital flows; boom-bust cycles; financial integration (search for similar items in EconPapers)
JEL-codes: F02 F36 F41 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-sea
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Citations: View citations in EconPapers (14)

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