Determinants of international transmission of business cycles to Turkish economy


ECONOMIC MODELLING, vol.36, pp.383-390, 2014 (SSCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 36
  • Publication Date: 2014
  • Doi Number: 10.1016/j.econmod.2013.10.010
  • Journal Indexes: Social Sciences Citation Index (SSCI), Scopus
  • Page Numbers: pp.383-390
  • Keywords: Business cycles, Transmission, Longest Common Subsequence, Panel regression, TRADE, SYNCHRONIZATION, SPECIALIZATION, INTEGRATION, COMOVEMENT, COUNTRIES, INTERDEPENDENCE
  • Hacettepe University Affiliated: Yes


This study aims to investigate the channels through which international business cycles are transmitted to Turkish economy. Our analysis follows two steps: i) business cycle transmission is measured using Longest Common Subsequence (LCS) method, a pattern recognition algorithm that accounts for the nonlinear and time-varying nature of business cycles and ii) the potential mechanisms of propagation of international business cycles are examined by specifying a panel regression model in which the LCS measure of synchronization is used as the dependent variable. Applying several panel estimation methods to the bilateral data from 22 countries over the 1998-2009 periods, we find that both trade and financial similarities are significant in the transmission of business cycles to Turkish economy. Especially, the results highlight the role of trade integration indicating that Turkish business cycles are closely linked with the business cycles of the members of European Custom Union. (C) 2013 Elsevier B.V. All rights reserved.