A Closer Look at the World Business Cycle Synchronization

This paper uses a transformation of the period-by-period index proposed by Cerqueira and Martins(2009), to overcome some of it shortcomings, in a non-parametric estimation to analyze how business cycle synchronization for a sample of 111 countries evolved in the period 1960-2007 . The period-by-period index is able to distinguish between negative correlations due to episodes in single years, asynchronous behavior in turbulent times and synchronous behavior over stable periods and the non-parametric approach provides a more detailed analysis than the use of a parametric approach. The results show that since the nineties the synchronization at the world level, within and between country groups, experienced a dramatic increase reaching the highest values ever at the sample end.