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This paper reviews the international business cycle among Group of Seven (G-7) countries since 1973 from two angles. An examination of business cycle synchronization among these countries using simple descriptive statistics shows that synchronized slowdowns have been the norm rather than the exception and that the slowdown in 2000-2001 largely followed patterns seen in the past. The paper also identifies the international business cycle with an asymptotic dynamic factor model. Two global factors explain roughly 80 percent of the variance in G-7 output gaps at business cycle frequencies. The factor model decomposes the "common part" of national output fluctuations into two factors, one capturing the average G-7 cycle and one that corrects for phase and amplitude differences. We also found some evidence supporting the hypothesis that global shocks were the main force behind the slowdown in 2000-2001.

Econometrics --- Macroeconomics --- Production and Operations Management --- Business Fluctuations --- Cycles --- Open Economy Macroeconomics --- Macroeconomic Aspects of International Trade and Finance: Forecasting and Simulation --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Macroeconomics: Production --- Classification Methods --- Cluster Analysis --- Principal Components --- Factor Models --- Economic growth --- Econometrics & economic statistics --- Business cycles --- Output gap --- Factor models --- Production --- Econometric analysis --- Economic theory --- Econometric models --- United States

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August to September 1998 has been characterized as one of the worst episodes of global financial distress in decades. This paper investigates the transmission of the Russian and the LTCM crises through global equity markets using a panel of 14 developing and industrial countries. The results show that contagion was systemic during the period, with industrial countries providing the dominant cross-country transmission linkages. Both crises reinforced each other, highlighting the importance of studying them jointly. An implication of the empirical results is that models of contagion that exclude industrial countries are potentially misspecified and may yield misleading outcomes.

Econometrics --- Finance: General --- Investments: Stocks --- Multiple or Simultaneous Equation Models: Models with Panel Data --- Financial Markets and the Macroeconomy --- International Lending and Debt Problems --- General Financial Markets: General (includes Measurement and Data) --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Classification Methods --- Cluster Analysis --- Principal Components --- Factor Models --- Finance --- Investment & securities --- Econometrics & economic statistics --- Stock markets --- Stocks --- Emerging and frontier financial markets --- Securities markets --- Factor models --- Financial markets --- Financial institutions --- Econometric analysis --- Stock exchanges --- Financial services industry --- Capital market --- Econometric models --- United States