Robust Analysis On Business Cycle Co-movements And Influence Factors Between China, Japan And Korea After Crisis

As the development of economic globalization, researches on economic cycle gradually turn to an open type from an independent research on a country singly. Many scholars have done some researches on economic coordination and gotten a lot of meaningful results. The research on economic cycle has two main aspects and three questions: the first aspect is the coordination of economic cycle between countries, including two questions as the identification and features of the coordination. The second is researches on economic variables which have impact on the economic cycle coordination.There are many research methods, including mainstream methods as Co-movements, VAR, Granger inspection, spectrum analysis, regression analysis, etc. These studies get results mostly based on a large number of statistics, with many countries as research objects.People gradually got some consensus: The economic cycle coordination is strong between developed countries but weak between developing countries and developed countries, also the developing countries each other. Even more they have no coordination. But along with the economic development and the rapid development of emerging economies, this coordination improves, especially China and India. As the global economy, the economic cycle coordination between countries is more and more closely.Of all the economic variables, people generally think that bilateral trade intensity, the similarity of industrial structure and the similarity of economic policy have important effects on economic cycle. Especially, they have positive correlations with the economic coordination. The financial crisis in 2008 made the global economy into downturn, which directly led people to concern on the economic cycle coordination. In this paper, we use China, South Korea and Japan as research objects and divide the research time range by the financial crisis. We study the features of economic cycle coordination between China and Japan or South Korea as well as the changes of them after the crisis. We also study the robustness of the effects by some economic variables. The structure and main contents of this paper are as follows: the first chapter introduces the main contents and methods in the paper, as well as the definition of research objects, the data sources and processing, a simple analysis of the innovation points and insufficiencies in this paper.The second chapter introduces the main economic theories involved in this paper and defines the concept of economy used here and gives the literature of economic cycle coordination and made brief summary of the literature.The third chapter presents and establishes two models used by the empirical researches of this paper. The first one is spectrum analysis. This chapter gives the related theories and the establishment of the model with continuous sequence and discrete sequence respectively. The other method is the robust testing methods, Extreme-bounds analysis.The fourth chapter is the first empirical part of this paper. In this part, we get frequency domain features of the economic cycle in China, Japan and South Korea and we get features and changes of the economic cycle coordination between China and Japan or South Korea using spectrum analysis and co-spectrum analysis. The three countries are almost the same on the duration of the economic cycle, about 6~8 quarters, which Japan is slightly long, while China and South Korea are the same, shorter than Japan. South Korea is the strongest and Japan is stronger than China on the volatility of economic cycle. Although they are both strong, the economic cycle coordination between China and Japan is stronger than that between China and South Korea at almost all the frequencies. The financial crisis raises the coordination.The fifth chapter is the second empirical part of the paper. In this chapter we use Extreme-bounds analysis to study the robust of the economic variables which have influences on economic cycle coordination. We can conclude that bilateral trade intensity has robust effect on the economic cycle coordination in both of the two couples. The bilateral trade intensity between China and Japan has positive effect on economic cycle coordination. This can prove that the bilateral trade between China and Japan is mainly intra-industry trade since 1990s. The case in China and South Korea is the opposite, since the trade between them is mainly inter-industry trade. The similarity of fiscal policy has positive correlation with economic cycle coordination between China and Japan but no robust effect on the couple of China and South Korea. Japan has always practiced discretionary macroeconomic regulation and control policy. China has also followed the Japanese economy policy, so the similarity of them is strong. South Korea has always practiced adaptive-cyclical fiscal policy and practice discretionary macroeconomic regulation recently. It also can explain why the economic cycle coordination between China and Japan is stronger than the couple of China and South Korea in all frequencies.Industrial structural similarity, monetary policy and FDI intensity are not robust variables in the couple of China and Japan. Although the index variable of industrial structural similarity is significant in regression, it is not significant in robust test using the method of EBA (Extreme-bounds analysis). The effect to economic cycle coordination by similarity of monetary policy and FDI intensity are not significant in the case of China and Japan. In the couple of China and South Korea, industrial structural similarity and FDI intensity are robust, the first is positive and the other is negative.This article uses frequency domain to do the empirical analysis, study the spectrum features of China, Japan and South Korea's economic cycle, the features of the economic cycle coordination between China and Japan or South Korea systematically, the effect of the financial crisis to the economic cycle coordination and the robust of the main macro-variables which affect the coordination. We obtain a series of conclusions. The research in this paper can validate the consensus got from the large sample statistical studies based on many countries and also get the features of the economic cycle coordination between China and Japan, South Korea as well as the robust of the related economic variables. All of the empirical tests are based on the frequency domain analysis which is different from the similar articles before. So it can confirm the theory and the consensus of the economic cycle coordination and provide a way to solve similar questions.