The world and “The world business cycle chronology”

Abstract

Twenty-one individual country business cycle chronologies, maintained and updated by the Economic Cycle Research Institute (ECRI), are analysed for their degree of synchronisation with a proposed “world business cycle chronology”. Several key results emerge. First, perhaps not surprisingly, the world’s four 20th Century locomotor economies of the US, UK, Germany and Japan are statistically significantly and reasonably strongly positively synchronised with the world cycle. Second, European countries in the sample are either positively synchronised with the world cycle at zero lag or with a lag of around three months. Third, the NAFTA countries (US, Canada and Mexico) are, perhaps again not unexpectedly, quite strongly positively synchronised with the world cycle at zero lag and with each other. Fourth, the single South American country included in the sample, Brazil, is strongly positively synchronised with the world cycle at zero lag as well as with the NAFTA countries – but behaves very differently from China and India with respect to the world cycle. Fifth, interestingly, the newly industrialized East Asian countries included in the sample appear to lead the world cycle by about three to nine months. Finally, and very interestingly, there appears to be some a priori evidence of a long leading negative synchronisation between the commodity exporting countries in the sample and the world cycle. Key words: world business cycle, synchronisation JEL classification: E32, E37