Business Intelligence

Macroeconomic Interdependence In East Asia

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Executive Summary

This paper analyzes macroeconomic interdependence among 10 Asian economies. In this connection, the authors decompose their macroeconomic activities (real GDP) into common and country-specific components using the Bai-Ng method (2004). The results suggest first that both components are nonstationary and have permanent effects on their overall economy. Second, they find the relative importance of common factors in all countries in terms of their contribution to variations in real GDP. But evidence is also obtained of country-specific effects becoming increasingly important in countries like China in recent years.

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