Economic convergence in a globalized world: The role of business cycle synchronization
Entity
UAM. Departamento de Economía AplicadaPublisher
Public Library of ScienceDate
2021-10-21Citation
10.1371/journal.pone.0256182
PLoS One 16.10 (2021): e0256182
ISSN
1932-6203DOI
10.1371/journal.pone.0256182Editor's Version
https://doi.org/10.1371/journal.pone.0256182Subjects
Factor models; Growth; Nations; EconomíaRights
© 2021 Lopez et alAbstract
Increasing economic integration and global synchronization can be key for countries aiming to catch up in GDP per capita terms. Little attention has hitherto been placed in synchronization as determinant of convergence. In this paper we estimate the effect of economic globalization and synchronization on income convergence for a sample of 89 developed and developing countries in the period 1970-2015. We use a dynamic factor model and panel data techniques to undertake the objectives of the paper. We show that synchronized countries (those correlated with the factor) exhibit a higher response on GDP per capita growth with variations on the global business cycle. This implies that synchronization improves growth for that group in global expansionary phases, but also implies risks during global recessions. On the contrary, the effect on growth of an economic globalization index is less relevant for synchronized countries than for asynchronized countries. The latter result implies that asynchronized countries can benefit more increasing their levels of economic globalization
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Google Scholar:Lopez, Andres
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Lucas Santos, Sonia de
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Delgado, Maria Jesus
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