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Abstract:
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Using real GDP growth forecasts, we measure the impact of business cycle synchronization on industrialized countries and Asia developing economies. Our measures are based on a Bayesian time-varying parameter dynamic factor model of the forecast revisions. Empirical results highlight a significant amount of global spillovers of real economic shocks from industrialized countries, while a regional business cycle in Asia is as important as the global cycle to developing economies. We find no evidence of permanent shifts in the degree of business cycle synchronization. Instead, transient shocks play a dominant role in the last 20 years.
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