Trade, Finance, Specialization and Synchronization

Trade Integration and Business Cycle Synchronization in the EMU: The Negative Effect of New Trade Flows

“…Here we adopt the empirical strategy initially developed by Imbs (2004) and extended to panel data analysis by Abbott et al (2008). A panel data model with 3SLS estimators fits well to the question at hand.…”

“…Following Imbs (2004) and Inklaar et al (2008), specialization is defined as the absolute difference of the GDP share of an industry in two countries, ie Specia ij,t = P s |V is − V js |. The corresponding data on 27 sectors of goods and services come from the OECD database.…”

“…However this direct effect offers only a partial view of the impact of new trade flows on business cycle comovements, given the interplay of trade variables. Following Imbs (2004) and Dées and Zorell (2012), we compute the overall effect of trade intensity, new trade flows and specialization on business cycle synchronization. Table 5 decomp oses the overall effect of each of these variables.…”

“…We adapt the simultaneous equation framework initially developed by Imbs (2004Imbs ( , 2010 and extended by Abbott et al (2008) to a panel data model. In contrast with the existing literature, we consider new trade flows as a separate driver of business cycle synchronization in association with trade intensity and trade structure.…”

Changing Nature of North-South Linkages: Stylized Facts and Explanations

“…For example, Frankel and Rose (1998), Kose and Yi (2006) and Baxter and Kouparitsas (2005) find that trade integration plays an important role in driving business cycle co-movement. Imbs (2004 and emphasizes the importance of sectoral similarity in addition to trade flows. Darvas, Rose, and Szapáry (2005) and Clark and van Wincoop (2001) provide some support for the role of policy coordination 6 Similarly, Calderon, Loayza, and Schmidt-Hebbel (2005) show the importance of the growth rate of trade partners in explaining domestic growth using a sample of 76 countries during 1970-2000.…”