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Deepening Interdependence or Decoupling Hypothesis In East Asia through Trade Transmission:: An Empirical Study Using Dynamic Fa,Used
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Decoupling refers to the divergence of business cycles among different countries, and Recoupling corresponds to convergence. Decoupling is just a fancy word for separation. The aim of this study is to discover whether there has been decoupling or convergence of business cycles through the trade channel. As trade integration increased among Asian countries, business cycle synchronization among these countries was expected to increase through trade transmission. Theoretically, however, increased trade can lead to business cycles synchronization either rising or falling. Interindustry trade resulting in higher specialization will induce less synchronized business cycles, while intraindustry trade could lead to increased business cycle synchronization. Thus, it is important to distinguish between intra and interindustry trade flows. A major part of the dissertation involved the calculation of interindustry trade indices and intraindustry trade indices at the aggregate and industry levels based on the original data from IMF and WB.
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