Tag Archives: Financial linkages

International business cycle synchronization: what is the role of financial linkages?

Ambrogio Cesa-Bianchi, Jean Imbs and Jumana Saleheen.

It is a well-known fact that financial integration has increased dramatically over the past few decades.  Has this rise led to higher or lower business cycle synchronization? The answer depends crucially on the source of the shock.  In response to common shocks, financial integration tends to lower business cycle synchronization.  But in response to a country-specific shock, business cycles are more synchronised between countries that are more financially integrated.

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Filed under Banking, Financial Stability, International Economics, Macroeconomics