Business Cycles synchronicity and income levels: has globalization brought us closer than ever? Rosmy Jean Louis* Daniel Simons Abstract



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Table 6 Synchronicity Across Income Groups based on Various Reference Cycles




Reference Cycles




Minimum Gap







Maximum Average & Maximum Median with Bhutan

Criteria

Country

Bivariate

Multivariate




Country

Bivariate

Multivariate

MiniMin /AD HOC Minimum

Australia

0.46

0.53




Ireland

0.60

0.53

Global Reference

France

0.72

0.76




Ireland

0.60

0.53

AD HOC Reference

USA

0.61

0.66




USA

0.62

0.71

























Average Synchronicity Ratio




0.60

0.65







0.61

0.59































Maximum Average & Maximum Median with Vietnam







Median Average

Criteria

Country

Bivariate

Multivariate




Country

Bivariate

Multivariate

MiniMin /AD HOC Minimum

Ireland

0.60

0.50




United Kingdom

0.61

0.71

Global Reference

Monaco

0.61

0.71




France

0.62

0.76

AD HOC Reference

USA

0.62

0.66




USA

0.62

0.7

























Average Synchronicity Ratio




0.61

0.62







0.62

0.72































Median
















Criteria

Country

Bivariate

Multivariate













MiniMin /AD HOC Minimum

N/A

N/A

N/A













Global Reference

France

0.73

0.74













AD HOC Reference

USA

0.57

0.66





































Average Synchronicity Ratio




0.65

0.70













Minimin is the minimum of all minimum average output gap for the reference countries within each pool. The AD HOC Minimum Reference is

the large country which is used as reference when the minimum average gap criterion selects a less-developed country. USA is chosen as a ad hoc



reference due to its well-known influence on the world economy.

Table 7 Synchronicity of the Reference Cycles

REFERENCE CYCLES

USA

UK

CHINA

FRANCE

Bhutan

0.50

0.47

0.45

0.45

Guinea

0.50

0.37

0.39

0.45

Pakistan

0.53

0.45

0.47

0.47

Vietnam

0.45

0.42

0.55

0.55

China

0.63

0.61

1.00

0.63

Paraguay

0.45

0.53

0.55

0.50

Sri Lanka

0.58

0.55

0.58

0.63

Equatorial Guinea

0.55

0.53

0.66

0.45

Poland

0.47

0.55

0.68

0.63

South Africa

0.58

0.50

0.53

0.63

Andorra

0.61

0.58

0.50

0.61

Liechtenstein

0.63

0.45

0.37

0.47

Virgin Island

0.42

0.61

0.42

0.53

Australia

0.53

0.55

0.68

0.58

Ireland

0.66

0.42

0.45

0.45

United Kingdom

0.66

1.00

0.61

0.76

United States

1.00

0.66

0.63

0.63

 

 

 

 

 

Bivariate Synchronization Ratio

0.63

0.56

0.53

0.59

Multivariate Synchronization Ratio

0.61

0.47

0.53

0.63

Synchronized Cycles Count

10

9

9

10

Note: Only countries with synchronicity measure greater than 0.50 were counted towards the average bivariate/multivariate synchronization ratio.

Table 8 Countries Used as Reference Cycles As per the Selection Criteria for the samples 1970 – 1989 and 1990-2008




 Sample 1970-1989

LIC

LMC

UMC

HIC-OECD

HIC-OTHER

Minimum Gap

Congo

Nauru

Chile

Luxembourg

Qatar

Median

Fictitious

Fictitious

Fictitious

Fictitious

Fictitious

Max Average

Indonesia

China

Botswana

Iceland

Aruba

Median Average

Nepal

Morocco

South Africa

France

French Polynesia

Max Median

Indonesia

China

Botswana

Iceland

Aruba

Ad Hoc










USA






















 Sample 1990-2008

 

 

 

 

 

Minimum Gap

Haiti

Jamaica

Gabon

Sweden

Andorra

Median

Fictitious

Fictitious

Fictitious

Fictitious

Fictitious

Max Average

Myanmar

China

Equatorial Guinea

Ireland

Virgin Island

Median Average

Malawi

Iran

Equatorial Guinea

Sweden

Antigua-Barbados

Max Median

Myanmar

China

Equatorial Guinea

Ireland

Virgin Island

Ad Hoc










USA




Note: Min Gap or Minimum Gap is the country with the lowest average output gap. The Median is the observation in the middle at each point in time, which gives us a column series we term Fictitious. The Max Average or Maximum Average is the country with the highest average growth rate over the full sample period. Median Average is obtained by computing the average growth rate for each country to select the country in the Middle as reference. The Max Median is obtained by computing the median growth rate for each country and select the country with the maximum value as reference. Once the references are selected, we apply the measures of synchronicity to the output gap data.

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