Trade Integration and Business Cycle Convergence: Is the Relation Robust across Time and Space?* |
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Authors: | Andrew Abbott Joshy Easaw Tao Xing |
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Affiliation: | 1. University of Bath, Bath BA2 7AY, England a.abbott@bath.ac.uk;2. University of Bath, Bath BA2 7AY, England j.z.easaw@bath.ac.uk;3. University of Bath, Bath BA2 7AY, England ecptx@bath.ac.uk |
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Abstract: | In this paper we investigate the relationship between trade intensity and the business cycle correlation using a panel data set taken from 24 countries over the period 1959–2003. Most previous studies did not account for the possibility that the business cycle correlation may be influenced by unobservable country‐pair specific effects. Our estimates, using both fixed‐ and random‐effects methodologies, suggest that trade intensity and the business cycle correlation are positively related to one another. However, detailed investigation shows that this relationship exists mainly for the European countries. |
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Keywords: | Economic integration trade intensity F15 F33 F41 |
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