Business Cycles International Trade:

Virtually all economies experience recurrent fluctuations in economic activity that persists for periods of several quarters to several years. Further, there is a definite tendency for the business cycles of developed countries to move togetherthere is a world component to business cycles. It can be argued that capital accumulation and international capital flows are central to understanding world trade and business cycles. In particular, fluctuations in net exports and the current account are shown to be dominated by trade in capital goods. However, it has proven consistently difficult to generate sufficient co-movement across countries in labor input and investment.