NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Determinants of Business Cycle Comovement: A Robust Analysis

Marianne Baxter, Michael A. Kouparitsas

NBER Working Paper No. 10725
Issued in September 2004
NBER Program(s):   EFG   IFM

This paper investigates the determinants of business cycle comovement between countries. Our dataset includes over 100 countries, both developed and developing. We search for variables that are robust' in explaining comovement, using the approach of Leamer (1983). Variables considered are (i) bilateral trade between countries; (ii) total trade in each country; (iii) sectoral structure; (iv) similarity in export and import baskets; (v) factor endowments; and (vi) gravity variables. We find that bilateral trade is robust. However, two variables that the literature has argued are important for business cycles industrial structure and currency unions are found not to be robust.

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Document Object Identifier (DOI): 10.3386/w10725

Published: Baxter, Marianne and Michael A. Kouparitsas. "Determinants Of Business Cycle Comovement: A Robust Analysis," Journal of Monetary Economics, 2005, v52(1,Jan), 113-157. citation courtesy of

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