A sia's Decoupling: Fact, Fairytale or Forecast?

Standard measures of economic co‐movement between A sia‐ P acific economies and those elsewhere had been observed to follow a downward trend, leading some commentators to suggest that the region was decoupling. However, this process reversed in response to the 2008 international financial crisis, an...

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Bibliographic Details
Published in:Pacific economic review (Oxford, England) England), 2013-08, Vol.18 (3), p.321-344
Main Authors: Lam, Lillie, Yetman, James
Format: Article
Language:English
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Summary:Standard measures of economic co‐movement between A sia‐ P acific economies and those elsewhere had been observed to follow a downward trend, leading some commentators to suggest that the region was decoupling. However, this process reversed in response to the 2008 international financial crisis, and co‐movement increased to historically high levels for some economies. We examine co‐movement patterns and show that these are very sensitive to changes in macroeconomic volatility over time. Controlling for this, however, co‐movement is closely linked to underlying trade and financial integration. If international links continue to strengthen in future, co‐movement will strengthen in tandem. Decoupling is more a fairytale than a fact or a forecast.
ISSN:1361-374X
1468-0106
DOI:10.1111/1468-0106.12028