Countries that trade more with each other tend to have more correlated business cycles. Yet, traditional international business cycle models predict a much weaker link between trade and business cycle comovement. We propose that the international diffusion of technology through trade in...

This paper examines how China's exports are affected by exchange rate shocks from countries who supply intermediate inputs to China. We build a simple small open economy model with intermediate goods trade to show that due to the intraregional trade in intermediate goods, a devaluation of other...

We define decoupling as an increase in the cross-country heterogeneity in long-term growth expectations. We identify growth expectations from a cointegrating relation between a country's output level and its stock market valuation. Fluctuations in this output-price or yp-ratio reflect changes in...

More than seventy percent of China's outward direct investment (ODI), according to the Ministry of Commerce statistics, is invested in Hong Kong, the British Virgin Islands, and the Cayman Islands. Using a unique micro-level dataset collected by the Heritage Foundation that documents individual...

This paper investigates the synchronisation of Hong Kong's economic growth with mainland China and the US. We identify trends of economic growth based on the permanent income hypothesis. Specifically, we first confirm whether real consumption in Hong Kong and mainland China satisfies the...

This paper develops a multi-level structural factor model to study international output co-movement and its underlying driving forces. Our method combines a structural VAR with a multi-level factor model, which helps us understand the economic meaning of the estimated factors. Using quarterly...

Growth and imports are correlated across countries, but the mechanisms underlying this relationship are not well understood. I develop a multi-country model in which imports and growth are endogenous variables connected by technological innovations and their international diffusion through...