The impact of intra-industry trade on business cycle synchronization in East Asia |
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| Institution: | 1. Department of Economics and Regional Development, Panteion University of Social and Political Sciences, 136 Syngrou Avenue, GR17671 Athens, Greece;2. Department of Accounting, Finance and Economics, Ulster University, Shore Road, Newtownabbey BT37 0QB, UK;3. Department of Accounting, Finance and Economics, Bournemouth University, Executive Business Centre, 89 Holdenhurst Road, BH8 8EB Bournemouth, UK;4. Department of Statistics, Athens University of Economics and Business, 76 Patission str., Athens 10 434, Greece;1. Department of Finance, College of Business Administration, King Saud University, Riyadh, Saudi Arabia;2. Faculty of Economic sciences and Management of Sousse, University of Sousse, Sousse, Tunisia;3. IPAG Lab, IPAG Business School, Paris, France;4. International Finance Group – Tunisia |
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| Abstract: | This paper empirically analyzes distinctions between intra- and inter-industry trade indices. The research indicates that the co-movements of business cycles are influenced more through the intra-industry trade channel than by the total volume of trade itself. As trade integration among Asian countries increased, business cycle synchronization among these countries was expected to expand through trade transmission. Inter-industry trade resulting in higher specialization will induce less synchronized business cycles, while intra-industry trade could lead to increased business cycle synchronization. Moreover, I find that increased business cycle synchronization, as one of the optimum currency area criteria, is overemphasized. |
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