Trade integration and business cycle co-movements: the case of Korea with other Asian countries |
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| Institution: | 1. Department of Economics, Korea University, 1-5 Anam-Dong, Sungbuk-Gu, Seoul, South Korea;2. Korea Institute for International Economic Policy, 300-4 Yomgok-Dong, Seocho-Gu, Seoul 137-747, South Korea;1. International Monetary Fund, United States;2. Department of Economics and Related Studies, University of York, United Kingdom;1. National Pension Research Institute, South Korea;2. Sogang University, South Korea |
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| Abstract: | As Korea increases its trade within Asia, it is becoming more and more integrated with the other economies in the region. Theoretically, increased trade can lead business cycles across trading partners to be patterned in either direction, towards convergence or divergence. By using data for 12 Asian economies, this paper finds that intra-industry trade is the major channel by which the business cycle of Korea becomes synchronized with that of other Asian economies, although increased trade itself does not necessarily lead to close business cycle coherence. |
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