International Business Cycle Synchronization in Historical Perspective*

We analyze the changes in business cycle synchronization among 16 industrial countries the over the past century and a quarter, demarcated into four exchange rate regimes. We find a secular trend towards increased synchronization for much of the twentieth century that has occurred across diverse exchange rate regimes. This finding contrasts with the mixed results reported in the recent literature, which has focused on the evidence for the past 20 or 30 years. Examining the role of global shocks and shock transmission in the rising synchronization, we find that global (common) shocks generally are the dominant influence.