Comovement in GDP Trends and Cycles Among Trading Partners

30 Pages Posted: 16 May 2012 Last revised: 10 Apr 2021

See all articles by Bruce A. Blonigen

Bruce A. Blonigen

University of Oregon - Department of Economics; National Bureau of Economic Research (NBER)

Jeremy Piger

University of Oregon - Department of Economics

Nicholas Sly

University of Oregon - Department of Economics

Date Written: May 2012

Abstract

It has long been recognized that business cycle comovement is greater between countries that trade intensively with one another. Surprisingly, no one has previously examined the relationship between trade intensity and comovement of shocks to the trend level of output. Contrary to the result for cyclical fluctuations, we find that comovement of shocks to trend levels of real GDP is significantly weaker among countries that trade intensively with one another. We also find that the influence of trade on comovement between shocks to trends has remained stable, or become stronger in recent decades, while the role of trade in generating cyclical comovement has diminished steadily over time. In short, we find that international trade relationships have a substantial impact on comovement of shocks to output trends across countries, and these effects stand in stark contrast to the conventional wisdom regarding cyclical comovement.

Suggested Citation

Blonigen, Bruce A. and Piger, Jeremy M. and Sly, Nicholas, Comovement in GDP Trends and Cycles Among Trading Partners (May 2012). NBER Working Paper No. w18032, Available at SSRN: https://ssrn.com/abstract=2060826

Bruce A. Blonigen (Contact Author)

University of Oregon - Department of Economics ( email )

1285 University of Oregon
Eugene, OR 97403
United States
541-346-4680 (Phone)
541-346-1243 (Fax)

National Bureau of Economic Research (NBER)

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Jeremy M. Piger

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States

Nicholas Sly

University of Oregon - Department of Economics ( email )

Eugene, OR 97403
United States

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