Bilateral Trade Intensity and Business Cycle Synchronization Nexus: An Analysis from Major Trading Partners of Pakistan


  • Maryam Batool PhD Scholar, Department of Economics, University of the Punjab Lahore
  • Nabila Asghar Associate Professor, Department of Economics and Business Administration, Division of Arts and Social Sciences, University of Education Lahore. Pakistan



Business Cycle Synchronization, Trade Intensity, HP-Filter, Panel Fixed Effect


The existing research on the relationship between bilateral trade and business cycle synchronization (BCS) is limited in the context of developing countries like Pakistan. Theoretically, bilateral trade can lead to convergence as well as divergence of business cycles depending upon prevailing economic conditions in a country. The present study is an attempt to explore the relationship between bilateral trade and business cycle synchronization in Pakistan. For empirical analysis, data of six major trading partners of Pakistan is collected for the period 1991-2017 and multidimensional fixed effect estimation technique has been used. The results of the study show that bilateral trade has significant and positive impact on BCS. The coordination of fiscal and monetary policies appear to be significant determinants of GDP synchronization. These results have strong implications for policymakers and practitioners for formulating and implementing policies for Pakistan to get the maximum benefits of BCS.


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How to Cite

Batool, M. ., & Asghar, N. . (2021). Bilateral Trade Intensity and Business Cycle Synchronization Nexus: An Analysis from Major Trading Partners of Pakistan. Review of Economics and Development Studies, 7(2), 231-242.