Trade, Global Value Chains and GDP Co-Movement : An Empirical Investigation
This paper provides up-to-date characterization of the association between trade and GDP comovement -- also called the trade comovement slope -- for 150 countries from 1962 to 2011. The paper shows that trade is significantly linked to more GDP cor...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2019
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/291361576685759900/Trade-Global-Value-Chains-and-GDP-Comovemement-An-Empirical-Investigation http://hdl.handle.net/10986/33060 |
| Summary: | This paper provides up-to-date
characterization of the association between trade and GDP
comovement -- also called the trade comovement slope -- for
150 countries from 1962 to 2011. The paper shows that trade
is significantly linked to more GDP correlation, either
directly through bilateral trade, or indirectly when two
countries trade with similar partners. This trade network
effect is strong for countries in all income groups and
provides an additional channel through which GDP
fluctuations propagate through trade linkages. It also shows
that countries of all income groups become more synchronized
with high income countries when the content of their trade
is more tilted towards inputs as opposed to final goods.
Related to this point, the paper also uncovers a strong link
between the stickiness of trade relationships and the extent
to which countries experience synchronized GDP comovement.
The results are robust to a wide range of different
measures, to the inclusion of many fixed effects, changes in
the sectoral composition of GDP, financial controls
capturing crosscountry investments as well as bilateral
financial claims. |
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