We are grateful to three anonymous referees for helpful comments on an earlier draft of this paper.
Trade Integration and Business Cycle Convergence: Is the Relation Robust across Time and Space?*
Article first published online: 21 JUL 2008
© The editors of the Scandinavian Journal of Economics 2008
The Scandinavian Journal of Economics
Volume 110, Issue 2, pages 403–417, June 2008
How to Cite
Abbott, A., Easaw, J. and Xing, T. (2008), Trade Integration and Business Cycle Convergence: Is the Relation Robust across Time and Space?. The Scandinavian Journal of Economics, 110: 403–417. doi: 10.1111/j.1467-9442.2008.00539.x
- Issue published online: 21 JUL 2008
- Article first published online: 21 JUL 2008
- First version submitted May 2005;final version received October 2007.
- Economic integration;
- trade intensity
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.