Abstract

In theories of international economics, the issue of business cycle synchronization and its effective factors emphasizing trade integration is essential for regional trade creation and development among countries. The main purpose of this paper is evaluation and comparison of the effective factors on business cycle synchronization especially the role of trade integration among the Euro Union, ASEAN, and D8 countries using panel data from 2000 to 2013. The results show that trade intensity, intra-industry trade and vertical intra-industry trade as indices of trade integration have a positive and significant effect in Europe and ASEAN. Also in D8 countries, the effect of trade intensity and intra-industry trade on business cycle synchronization is positive and significant, while vertical intra-industry trade is not effective. Moreover, the comparison among economic blocks shows that intra-industry trade relative to trade intensity and vertical intra-industry trade has more effect on business cycle synchronization.