The Trade Comovement Problem in International Macroeconomics

Abstract

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Foreign direct investment and business cycle co-movements: The panel data evidence

“…This result is similar to those of Frankel and Rose (1998) and Kose and Yi (2002) among others. Trade is found to be strongly and positively correlated with business cycle co-movements.…”

“…The annual data for real GDP are taken from the World Bank's World Development Indicators. These two measures are also used by Clack and van Wincoop (2001) and Kose and Yi (2002).…”

Decoupling Asia Revisited

“…Kose and Yi (2002) argued that increased trade linkages would likely encourage countries to specialize in certain production, and that increased interindustry specialization across countries would decrease the comovement of international business cycles. In this context, not just the size of trade but also similarities in industrial structures would be important for explaining output cofluctuations.…”

Trade intensity and output synchronisation: On the endogeneity properties of EMU

“…However, standard international business cycle models have difficulty in matching the Frankel and Rose (1998) empirical results, leading to a "tradecomovement puzzle" (Kose and Yi 2006). According to standard theory, trade intensity has an ambiguous effect on the co-movement of output.…”