How to order
IMF Publications

Working Papers in full text
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All


Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile



Putting the Parts Together: Trade, Vertical Linkages, and Business Cycle Comovement

Author/Editor: di Giovanni, Julian | Levchenko, Andrei A.
Authorized for Distribution: August 1, 2009
Electronic Access: Free Full Text (PDF file size is 1,548KB)
Use the free Adobe Acrobat Reader to view this PDF file.
 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: Countries that trade more with each other exhibit higher business cycle correlation. This paper examines the mechanisms underlying this relationship using a large cross-country industry-level panel dataset of manufacturing production and trade. We show that sector pairs that experience more bilateral trade exhibit stronger comovement. Vertical linkages in production are an important explanation behind this effect: bilateral international trade increases comovement significantly more in cross-border industry pairs that use each other as intermediate inputs. Our estimates imply that these vertical production linkages account for some 30% of the total impact of bilateral trade on the business cycle correlation.
 
Order a print copy
Series: Working Paper No. 09/181
Subject(s): Bilateral trade | Business cycles | Cross country analysis | Economic models | Globalization | Industrial production | Industrial sector | Industrial trade | International trade | Manufacturing sector | Trade relations
Author's keyword(s): Business cycle comovement; vertical linkages; international trade
 
English  
    Published:   August 1, 2009        
            Format:   Paper
    Stock No:   WPIEA2009181   Pages:   55
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
Please address any questions about this title to publications@imf.org.