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Business cycle synchronisation in East Asia

Authors
Journal
Journal of Asian Economics
1049-0078
Publisher
Elsevier
Publication Date
Volume
20
Issue
1
Identifiers
DOI: 10.1016/j.asieco.2008.08.001
Keywords
  • Business Cycles Synchronisation
  • East Asia
  • Dynamic Factor Model
Disciplines
  • Economics

Abstract

Abstract Against the background of the rapid inter- and intra-regional integration of East Asia, we examine the extent and nature of synchronisation of business cycles in the region. We estimate a dynamic common factor model for output growth of 10 East Asian countries. A significant common factor is shared by all Asian countries considered, except China and Japan. The degree of synchronisation has fluctuated over time, with an upward trend particularly evident for the newly industrialised economies. Synchronisation appears to mainly reflect strong export synchronisation, rather than common consumption or investment dynamics. A number of external factors, such as the oil price and the JPY–USD exchange rate, appear to play a role in synchronising activity.

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