Business cycles in the US and five ASEAN countries: are they related?

Hway-Boon Ong, Chin-Hong Puah, Muzafar Shah Habibullah


Given the inter-country linkages arising from technological advances in communication and transportation, this paper examines the interdependent relationships between the output of the world’s largest economy, the US, and those of five other ASEAN countries, namely, Indonesia, Malaysia, Philippines, Singapore and Thailand. Based on results of the augmented VAR of the Granger non-causality test, the paper finds a weak interdependence between the US and the five ASEAN countries, but a strong interdependence among the ASEAN countries. The empirical findings also revealed bidirectional causality among ASEAN countries especially Malaysia and Singapore. As such, every ASEAN country has to consider the economic developments and policies of other ASEAN countries as their decisions could affect one another.


JEL classification: E32, O57


Granger non-causality; augmented-VAR; MWald test; business cycles

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