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



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Table 10 Reference Cycles Across Pools of Countries with Synchronized cycles – Subsamples 1970 -1989 and 1990 - 2008

Criteria and Selection

Minimum Gap




 

1970-1989

 

1990 -2008

 

 

References

Output Gap

 

References

Output Gap

 

 

Congo

0.0002

 

Haiti

0.0003

 

 

Nauru

0.0150

 

Jamaica

0.0004

 

 

Chile

0.0030

 

Gabon

0.0064

 

 

Luxembourg

0.0001

 

Sweden

0.0000

 

 

Qatar

0.0002

 

Andorra

0.0010

 

 

 

 

 

 

 

 

Minimum

 

0.0001

 

 

0.0000

 

Selection

 

Luxembourg



 

Sweden



AD HOC Minimum Reference

 

N/A

..

 

N/A

..

Global Reference

 

Luxembourg*



 

Sweden*



Global Reference but *

 

Congo

X

 

Haiti

X

Global Reference OECD but *

 

New Zealand



 

France



AD HOC Reference

 

France and USA



 

USA



 

 

 

 

 

 

 




MaximumAverage & Maximum Median Growth Rate




 

1970-1989

 

1990 -2008

 

 

References

Output Gap

 

References

Output Gap

 

 

Indonesia

0.0150

 

Myanmar

0.0240

 

 

China

0.0500

 

China

0.0700

 

 

Botswana

0.0150

 

Equatorial Guinea

0.2100

 

 

Iceland

0.0200

 

Ireland

0.0440

 

 

Aruba

0.0340

 

Virgin Island

0.0340

 

 

 

 

 

 

 

 

Minimum

 

0.0150

 

 

0.0240

 

Selection

 

Indonesia

X

 

Myanmar

X

AD HOC Minimum Reference

 

China



 

China



Global Reference

 

Luxembourg*



 

Sweden*



Global Reference but *

 

Congo

X

 

Ireland



Global Reference OECD but *

 

New Zealand



 

N/A

..

AD HOC Reference

 

France and USA



 

France and USA



 

 

 

 

 

 

 




Median Average Growth Rate




 

1970-1989

 

1990 -2008

 

 

References

Output Gap

 

References

Output Gap

 

 

Nepal

0.0020

 

Malawi

0.0042

 

 

Morocco

0.0160

 

Iran

0.0630

 

 

South Africa

0.0070

 

Equatorial Guinea

0.2100

 

 

France

0.0050

 

Sweden

0.0000

 

 

French Polynesia

0.0130

 

Antigua-Barbados

0.0200

 

 

 

 

 

 

 

 

Minimum

 

0.0020

 

 

0.0000

 

Selection

 

Nepal

X

 

Sweden



AD HOC Minimum Reference

 

France



 

N/A

..

Global Reference

 

Luxembourg*



 

Sweden*



Global Reference but *

 

Qatar



 

Haiti

X

Global Reference OECD but *

 

New Zealand



 

France



AD HOC Reference

 

USA



 

USA



We have 5 possible groupings of the countries with cycles associated with one or more countries for the World. The grouping based on the Median is left out in this table because no country in that pool can be portrayed as a reference because the Median is considered as a fictitious country. The Minimum Gap pool for example contains all countries that were selected by the minimum average gap criterion with SR above 0.50 irrespective of the income group. Minimin is the minimum of all minimum average output gap for the reference countries within each pool. Once this minimum is found the country associated is considered under Selection, and a decision is made as to whether it is plausible to use this country as one of the references for the pool. If the country is a less-developed or a very small open-economy country it defies common sense to use it as a reference cycle when there is a large country in the group. A check mark is used if the answer is yes and a cross is used otherwise. If we have to reject the country selected by the Minimin as a potential reference cycle, we take the large country in the group of 5 previous references the bivariate set up within that specific pool as the AD HOC Minimum Reference. The Global Reference cycle is the country with the minimum average output gap in the big pool. Since Luxembourg and Sweden kept reappearing as Global Reference, an effort was made to rid the results of such bias by computing the minimum average gap for the pool while setting aside these two countries. Common sense was used to either accept the alternative found or look into the pool for an OECD country, hence the terms Global Reference but * and Global Reference OECD but *. USA is of course used an ad hoc reference since it is the largest economy of the world. We have also brought France as another ad hoc whenever none of the criteria pointed to France. This accords with our earlier finding that France might play an even greater role than the USA in driving the world business cycle.

 

 



 

 


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