International Business Cycle Coherence and Phases

This paper examines international linkages amongst G7 economies, in terms of co-movements in output growth and fluctuations, in the frequency domain. The paper has identified patterns in international business cycle co-movements among the G7, offering a general outlook of international business cycle co-movements. Moreover, the paper details the lower frequency, higher frequency and middle range characteristics of international co-movements in output growth and fluctuations. The main findings of the study are that co-movements among G7 economies are considerably stronger at lower frequencies, and G7 economies have become more synchronized considerably in episode 2 since the new millennium. The results and findings show support for real business cycle theory being extended to an international arena, with long effect real shocks impacting economies across borders. The three euro economies become more integrated since the new millennium, against a background that all G7 economies have also become more synchronized