Abstract
This paper extends our previous research on East Asia to the case of 14 European countries from 1977 to 1999. According to our empirical results, intraindustry trade is again the major channel through which the business cycles of European countries become synchronized. This contrasts with existing studies that found that increased trade itself led to the synchronization of business cycles. Our findings have important implications for the adoption of a currency union, as we expect that the costs of joining a currency union will diminish significantly only when intraindustry trade becomes dominant.
| Original language | English |
|---|---|
| Pages (from-to) | 104-123 |
| Number of pages | 20 |
| Journal | Review of World Economics |
| Volume | 141 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 2005 Apr |
Bibliographical note
Funding Information:Remark: We would like to thank Harmen Lehment and an anonymous referee for their constructive comments. We would also like to thank Chi Young Song and Young Seob Rhee for their useful comments on our earlier draft. Hanjin Park provided excellent research assistance. The first author greatly appreciates the financial support from LG Yonam Foundation. Please address correspondence to Yunjong Wang, Vice President, SK Research Institute for SUPEX Management, 99 Seorin-dong, Jongro-gu, Seoul 100-101, Korea; e-mail: [email protected]
Copyright:
Copyright 2011 Elsevier B.V., All rights reserved.
Keywords
- Business cycle co-movements
- Europe
- Trade integration
- Trade intensity intraindustry trade
ASJC Scopus subject areas
- General Economics,Econometrics and Finance