Wavelet spectrum analysis of business cycles of China and G7 countries

Abstract

We employ a wavelet spectrum analysis to study globalization and business cycles in China and G7 countries. The co-movement synchronization between G7 countries and China is shown to have undergone frequent and large changes during our sample period. The co-movements for business-cycle frequencies are generally different from those for other frequencies. We find a significant relationship between the time-varying wavelet measure of synchronization and trade only for business-cycle frequencies. The co-movements at longer frequencies are negatively related to trade, so that the overall co-movements and trade tend not to be significantly related.

Keywords:

• globalization
• business cycles
• synchronization
• trade
• wavelet analysis

JEL Classification:

• E32
• F15
• F42

Notes

¹ Detailed results for different cycle lengths are available from the authors upon request.