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UNU-WIDER China in the World Economy: Dynamic Correlation Analysis of Business Cycles

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A teenager wears torn rubber boots in a muddy local market in Bac Ha, Viet Nam. As of 2005 figures, half the world population—more than 3 billion people–is estimated to live on less than USD 2.50 a day. Bac Ha, Viet Nam. UN Photo/Kibae Park.

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China in the World Economy: Dynamic Correlation Analysis of Business Cycles

We analyse the business cycles in China and in selected OECD countries between 1992 and 2006. We show that, although negative correlation dominates for nearly all countries, we can also see large differences for various frequencies of cyclical developments. On the one hand, nearly all OECD countries show positive correlations of the very short-run developments that may correspond to intensive supplier linkages. On the other hand, business cycle frequencies (cycles with periods between 1.5 and 8 years) are typically negative. Nevertheless, countries facing a comparably longer history of intensive trading links tend to show also slightly higher correlations of business cycles with China.
Publisher:
UNU-WIDER
Series:
WIDER Research Paper
Volume:
2008/02
Title:
China in the World Economy: Dynamic Correlation Analysis of Business Cycles
Authors:
Jarko Fidrmuc and Ivana Bátorová
Publication date:
January 2008
ISSN Web:
1810-2611
ISBN 13 Web:
9789292300425
Copyright holder:
© UNU-WIDER
Copyright year:
2008
Keywords:
business cycles, synchronisation, trade, FDI, dynamic correlation
JEL:
E32, F15, J50
Project:
Southern Engines of Global Growth
Sponsor:
The governments of Denmark (Royal Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Norway (Royal Ministry of Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development).
Format:
online

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