TY - JOUR AU - Aruoba, S. Boragan AU - Diebold, Francis X AU - Kose, M. Ayhan AU - Terrones, Marco E TI - Globalization, the Business Cycle, and Macroeconomic Monitoring JF - National Bureau of Economic Research Working Paper Series VL - No. 16264 PY - 2010 Y2 - August 2010 DO - 10.3386/w16264 UR - http://www.nber.org/papers/w16264 L1 - http://www.nber.org/papers/w16264.pdf N1 - Author contact info: S. Borağan Aruoba Department of Economics University of Maryland 3105 Tydings Hall College Park, MD 20742-7211 Tel: 301/405-3523 E-Mail: aruoba@econ.umd.edu Francis X. Diebold Department of Economics University of Pennsylvania 133 South 36th Street Philadelphia, PA 19104-6297 Tel: 215/898-1507 Fax: 212/573-4217 E-Mail: fdiebold@sas.upenn.edu M. Ayhan Kose World Bank 1818 H St NW Washington, DC 20433 E-Mail: akose@worldbank.org Marco E. Terrones Research Department International Monetary Fund 700 19th Street, N.W. Washington DC 20431 E-Mail: marcoeterrones@gmail.com M1 - published as S. Borağan Aruoba, Francis X. Diebold, M. Ayhan Kose, Marco E. Terrones. "Globalization, the Business Cycle, and Macroeconomic Monitoring," in Richard Clarida and Francesco Giavazzi, organizers, "NBER International Seminar on Macroeconomics 2010" University of Chicago Press (2011) AB - We propose and implement a framework for characterizing and monitoring the global business cycle. Our framework utilizes high-frequency data, allows us to account for a potentially large amount of missing observations, and is designed to facilitate the updating of global activity estimates as data are released and revisions become available. We apply the framework to the G-7 countries and study various aspects of national and global business cycles, obtaining three main results. First, our measure of the global business cycle, the common G-7 real activity factor, explains a significant amount of cross-country variation and tracks the major global cyclical events of the past forty years. Second, the common G-7 factor and the idiosyncratic country factors play different roles at different times in shaping national economic activity. Finally, the degree of G-7 business cycle synchronization among country factors has changed over time. ER -