Business Intelligence

Financial Integration And International Transmission Of Business Cycles: Evidence From Dynamic Correlations

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Executive Summary

The authors estimate determinants of dynamic correlations of output comovement of OECD countries between 1990 and 2008. They show that trade intensity, degree of financial integration and specialization pattern have significantly different effects on comovements at different frequencies. This can bias the results using aggregate data or statistical filters. For example, financial integration is showed to have the highest positive effect for middle business frequencies, while it is insignificant for short-term frequencies. The impact of economic integration on the international transmission of business cycles is not unambiguous.

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