Working Paper
Business Cycle Volatility and Globalization: A Survey
Kiel Working Papers, 1107
Authors
Publication Date
JEL Classification
F41
E32
G15
Key Words
The globalization of capital and product markets has many implications for economic welfare. Countries can specialize in the production of goods for which they have comparative advantages, and capital is allocated more efficiently. However, one potentially adverse effect of globalization is the possibility that business cycle volatility might increase. Rapid and badly co-ordinated capital account liberalization has been blamed for enhancing the vulnerability of emerging markets to unstable international capital flows. At the same time, business cycle volatility in OECD countries seems to have been on a decline in the past decades.
