Skip to content
Licensed Unlicensed Requires Authentication Published by De Gruyter Oldenbourg March 16, 2016

Business Cycle Co-movement and Trade Intensity in the Euro Area: is there a Dynamic Link?

Marcus Kappler EMAIL logo

Summary

This paper extends the recent literature that exclusively looks at the static link between bilateral trade intensity and business cycle synchronisation. A cross section augmented VAR framework with an unobservered common factor structure is used in order to apply the concept of Granger causality to test for dynamic links between variables. I conclude that although countries with intensive trade linkages also tend to have more similar business cycles in the long-run, the trade channel does not help to explain much of the short-run variation of business cycle co-movement in the euro area. The common factors have high predictive power for both business cycle co-movement and bilateral trade intensity. Thus, the paper provides evidence for the common shock view on business cycle synchronisation.

Online erschienen: 2016-3-16
Erschienen im Druck: 2011-4-1

© 2011 by Lucius & Lucius, Stuttgart

Downloaded on 5.12.2022 from frontend.live.degruyter.dgbricks.com/document/doi/10.1515/jbnst-2011-0204/html
Scroll Up Arrow