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ID: 156463

Impact of intra-industry trade on business cycle synchronization in East Asia / Li, Linyue

Li, Linyue	Journal Article
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Summary/Abstract

This paper empirically analyzes distinctions between intra- and inter-industry trade indices. The research indicates that the co-movements of business cycles are influenced more through the intra-industry trade channel than by the total volume of trade itself. As trade integration among Asian countries increased, business cycle synchronization among these countries was expected to expand through trade transmission. Inter-industry trade resulting in higher specialization will induce less synchronized business cycles, while intra-industry trade could lead to increased business cycle synchronization. Moreover, I find that increased business cycle synchronization, as one of the optimum currency area criteria, is overemphasized.

Key Words

Intra-Industry Trade ; Correlations ; Business Cycle Synchronization

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ID: 143436

Whither China? reform and economic integration among Chinese regions / Huang, Shuo; Fidrmuc, Jan ; Fidrmuc, Jarko

Fidrmuc, Jarko	Article
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This paper investigates the changing nature of economic integration in China. Specifically, we consider business-cycle synchronization (correlation of demand and supply shocks) among Chinese provinces during the period 1955–2011. We find that the symmetry of supply shocks has declined after the liberalization initiated in 1978. In contrast, the correlation of demand shocks has increased during the same period. We then seek to explain these correlations by relating them to factors that proxy for interprovincial trade and vulnerability of regions to idiosyncratic shocks. Interprovincial trade and similarity in factor endowments tend to make shocks more symmetric. Surprisingly, foreign trade and inward FDI have little effect on the symmetry of shocks.

Key Words

China ; Economic Reform ; SVAR Model ; Business Cycle Synchronization

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