Regional Business Cycles and National Economic Borders: What Are the Effects of Trade in Developing Countries? |
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Authors: | Christian Volpe Martincus Andrea Molinari |
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Institution: | (1) Inter-American Development Bank, 1300 New York Avenue, Stop W0612, 20577 Washington D.C., USA;(2) University of Sussex, Brighton, UK |
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Abstract: | Using regional gross product data for Argentina and Brazil over the period 1961–2000, we find that business cycle synchronization
within countries is substantially larger than across them. Factors such as monetary policy and large country-specific shocks
play a significant role in explaining this observed border effect. Furthermore, our GMM single and multiple equation estimates
based on Brazilian states and Argentinean national data provide indicative evidence that the higher level of trade among regions
within a country is an important factor that accounts for differences in output correlations across countries.
JEL no. F15, F42, E32, R11 |
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Keywords: | Trade regions business cycles border Argentina Brazil |
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