Publication:
Adding Space to the International Business Cycle

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dc.contributor.authorAbate, Girum Dagnachew
dc.contributor.authorServen, Luis
dc.date.accessioned2019-03-21T18:53:43Z
dc.date.available2019-03-21T18:53:43Z
dc.date.issued2019-03
dc.description.abstractGrowth fluctuations exhibit substantial synchronization across countries, which has been viewed as reflecting a global business cycle driven by shocks with worldwide reach, or spillovers resulting from local real and/or financial linkages between countries. This paper brings these two perspectives together by analyzing international growth fluctuations in a setting that allows for both global shocks and spatial dependence. Using annual data for 117 countries over 1970-2016, the paper finds that the cross-country dependence of aggregate growth is the combined result of global shocks summarized by a latent common factor and spatial effects accruing through the growth of nearby countries -- with proximity measured by bilateral trade linkages or geographic distance. The latent global factor shows a strong positive correlation with worldwide TFP growth. Countries' exposure to global shocks rises with their openness to trade and the degree of commodity specialization of their economies. Despite its simplicity, the empirical model fits the data well, especially for advanced countries. Ignoring the cross-country dependence of growth, by omitting spatial effects or common shocks (or both) from the analysis, leads to a marked deterioration of the empirical model's in-sample explanatory power and out-of-sample forecasting performance.en
dc.identifierhttp://documents.worldbank.org/curated/en/756731553172566723/Adding-Space-to-the-International-Business-Cycle
dc.identifier.doi10.1596/1813-9450-8786
dc.identifier.urihttps://hdl.handle.net/10986/31434
dc.languageEnglish
dc.publisherWorld Bank, Washington, DC
dc.relation.ispartofseriesPolicy Research Working Paper;No. 8786
dc.rightsCC BY 3.0 IGO
dc.rights.holderWorld Bank
dc.rights.urihttp://creativecommons.org/licenses/by/3.0/igo
dc.subjectECONOMIC GROWTH
dc.subjectBUSINESS CYCLES
dc.subjectSPATIAL ECONOMICS
dc.subjectTOTAL FACTOR PRODUCTIVITY
dc.subjectTRADE LIBERALIZATION
dc.subjectSPECIALIZATION
dc.titleAdding Space to the International Business Cycleen
dc.typeWorking Paperen
dc.typeDocument de travailfr
dc.typeDocumento de trabajoes
dspace.entity.typePublication
okr.crossref.titleAdding Space to the International Business Cycle
okr.date.disclosure2019-03-21
okr.doctypePublications & Research
okr.doctypePublications & Research::Policy Research Working Paper
okr.docurlhttp://documents.worldbank.org/curated/en/756731553172566723/Adding-Space-to-the-International-Business-Cycle
okr.guid756731553172566723
okr.identifier.doi10.1596/1813-9450-8786
okr.identifier.externaldocumentum090224b086abd366_1_0
okr.identifier.internaldocumentum30920443
okr.identifier.reportWPS8786
okr.importedtrueen
okr.language.supporteden
okr.pdfurlhttp://documents.worldbank.org/curated/en/756731553172566723/pdf/WPS8786.pdfen
okr.statistics.combined1566
okr.statistics.dr756731553172566723
okr.statistics.drstats1197
okr.topicMacroeconomics and Economic Growth::Business Cycles and Stabilization Policies
okr.topicMacroeconomics and Economic Growth::Economic Growth
okr.topicMacroeconomics and Economic Growth::Economic Theory & Research
okr.topicMacroeconomics and Economic Growth::Spatial and Local Economic Development
okr.unitDevelopment Research Group, Development Economics
relation.isAuthorOfPublication2c4139d2-7458-5296-9aea-6d3db3e1ae1e
relation.isAuthorOfPublication.latestForDiscovery2c4139d2-7458-5296-9aea-6d3db3e1ae1e
relation.isSeriesOfPublication26e071dc-b0bf-409c-b982-df2970295c87
relation.isSeriesOfPublication.latestForDiscovery26e071dc-b0bf-409c-b982-df2970295c87
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