De Grauwe, P;
Ji, Y;
(2017)
The International Synchronisation of Business Cycles: the Role of Animal Spirits.
Open Economies Review
, 28
(3)
pp. 383-412.
10.1007/s11079-017-9434-3.
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Abstract
Business cycles among industrial countries are highly correlated. We develop a two-country behavioral macroeconomic model where the synchronization of the business cycle is produced endogenously. The main channel of synchronization occurs through a propagation of “animal spirits”, i.e. waves of optimism and pessimism that become correlated internationally. We find that this propagation occurs with relatively low levels of trade integration. We do not need a correlation of exogenous shocks to generate synchronization. We also empirically test the main predictions of the model.
| Type: | Article |
|---|---|
| Title: | The International Synchronisation of Business Cycles: the Role of Animal Spirits |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1007/s11079-017-9434-3 |
| Publisher version: | http://doi.org/10.1007/s11079-017-9434-3 |
| Language: | English |
| Additional information: | © The Author(s) 2017. This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made. |
| Keywords: | Animal spirits; Behavioral macroeconomics; Business cycles |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > SSEES |
| URI: | https://discovery-pp.ucl.ac.uk/id/eprint/1559377 |
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