01843cas a2200253 a 4500 AALejournalIMF006017 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451873283 1018-5941 BD-DhAAL BD-DhAAL Levchenko, Andrei. Putting the Parts Together : Trade, Vertical Linkages, and Business Cycle Comovement / Andrei Levchenko, Julian Di Giovanni. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (55 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Countries that trade more with each other exhibit higher business cycle correlation. This paper examines the mechanisms underlying this relationship using a large cross-country industry-level panel dataset of manufacturing production and trade. We show that sector pairs that experience more bilateral trade exhibit stronger comovement. Vertical linkages in production are an important explanation behind this effect: bilateral international trade increases comovement significantly more in cross-border industry pairs that use each other as intermediate inputs. Our estimates imply that these vertical production linkages account for some 30% of the total impact of bilateral trade on the business cycle correlation. Mode of access: Internet Di Giovanni, Julian. IMF Working Papers; Working Paper ; No. 2009/181 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/181/001.2009.issue-181-en.xml IMF e-Library