@article{trancoso2020financial,
  title = {The Financial Driver of Business Cycle Synchronization},
  author = {Tiago TRANCOSO and Sofia GOMES},
  year = 2020,
  url = {https://ibimapublishing.com/articles/IBIMABR/2020/420739/},
  journal = {IBIMA Business Review},
  volume = 2020,
  pages = 17,
  doi = 10.5171/2020.420739,
  abstract = {This paper measures the impact of financial integration on business cycle synchronization (BCS) using a multivariate factorial approach. By allowing bilateral financial integration to load both on de facto quantity and price measures, positive and strong indirect effects of financial integration are found on BCS, running through real channels such as trade integration and structural similarity. Financial integration has become the main driver of BCS, as the magnitude of the indirect effects greatly overrides the negative direct effect expected by standard theories. The results suggest that disentangling the financial channel in its direct and indirect effects is necessary for a comprehensive understanding of the complex dynamics governing economic integration processes such as currency areas and monetary unions.},
  keywords = {Business cycle synchronization; Financial Integration; Factor Model; Structural Equation Model.},
  note = Article ID: 420739
}