Business cycle synchronization and regional integration: a case study for central america (english) abstract in early january 2003, the united states and costa rica, el salvador, guatemala, honduras, and nicaragua launched official negotiations for the central american free trade agreement (cafta), a treaty that would expand nafta-style trade barrier reductions. While there is a role for a geographic component of regional business cycle synchronization—most european countries were grouped together, and most south american countries were grouped together—other country-specific characteristics appear to also determine business cycle synchronization within regions. Latin america is notoriously absent in the well-known historical business cycle studies by sheffrin (1988) and backus and kehoe (1992), and only argentina is covered in more recent work along similar lines (basu and taylor, 1999. Three regions, namely, africa, asia, and latin america importantly, the difference between the variance decomposition accounted for by the international factor in the regional versus the common model is 5.
Asymmetries over the business cycle, and to study international synchronisation of business cycles regimes for eight latin american countries and the united states an essential feature of this methodology is that it distinguishes between short-run. Business cycles across regions in latin america and with the common sources fourth, is to study the evolution of co-movements in real growth over time in two sub-periods: 1970-1986 and 1987-2006. With deeper trade integration between central america and the united states, it is expected that there will be closer links in business cycles among central america and the united states the aim of this paper is to assess the degree of business cycle synchronization between central america and the united states.
Business cycles in latin america and the caribbean financial integration in the nineties may have resulted in a shift in the evolution of business-cycle synchronization including latin. 2011 the peak of their own business cycles this synchronicity notwithstanding, the 2012 growth forecasts for individual countries in lac are significantly heterogeneous, reflecting complex interactions between external and country-specific factors. A metronome is an instrument to measure the time and that the musicians use for their work one of the most curious phenomena is observed when different metronomes that have a different frequency between themselves end up synchronizing perfectly this symbolizes what i find so fascinating in the. Published: fri, 16 mar 2018 business cycles synchronization in latin america: a tvtpms approach introduction: over the last decades, there has been a growing interest in the business cycle transmissions among countries and interdependencies.
The comovement of business cycle studies find positive relations between trade and business cycle synchronization therefore, increased trade and economic relationship between the emerging market economies and advanced economies have the potential for the convergence of their business cycles. Common factors in latin america's business cycles journal of development business cycle synchronization and regional integration: a case study for. The international comovements of business cycles have a large discrepancy between theory and data in the 1992 study of backus et al, featuring the postwar us and some european countries' business cycles.
This article assesses the degree of business cycle synchronization between central america and the united states—relevant not only for a better understanding of the influence of important trading partners on the business cycle fluctuations in the domestic economy but for evaluating the costs and benefits of macroeconomic coordination. Business cycle synchronization (kalemli-ozcan, sorensen and yosha, 2001): higher integration in both international goods and financial markets would allow countries to insure against asymmetric shocks through diversification of ownership and can afford to have a specialized. Economic integration in latin america by macroeconomic synchronization or business cycles co-movements is regarded the key to successful integration a complete. Classical business cycles in latin america: turning points asymmetrie, s and international synchronisation pablo mejia-reyes el colegi mexiquenso e.
The paper finds a relatively low degree of business cycle synchronization within central america as well as between central america and the united states the business cycle synchronization is expected to increase only modestly with further trade expansion, making the coordination of macroeconomic policies within cafta somewhat less of a priority. Mejía-reyes, p classical business cycles in america 77 to be explicitly considered this literature has emphasised the existence of asymmetries in mean, variance and duration between. A spike in business cycles synchronization is evident from 2008q3 however, it is substantially more pronounced amongst developed countries than in emerging east asia, or indeed latin america the ongoing crisis appears to affect east asian economies in more differentiated ways than the rest of the developed world.
This paper analyzes the evolution of growth cycles and business cycles in latin america from 1980 to 2013 by using monthly industrial production focusing on both synchronization and. This paper examines the effects of regional versus global integration and trade versus financial integration on regional business cycle synchronization in three regions containing developing and emerging countries (east asia, latin america, and central and eastern europe. Downloadable this paper adopts a flexible framework to assess both short- and long-run business cycle linkages between six latin american (la) countries and the four largest economies in the world (namely the us, the euro area, japan and china) over the period 1980:i-2011:iv.