Business Cycle Synchronization and Patterns of Trade: Cases from Gulf Cooperation Council Countries

Do similarities in trade patterns of GCC countries (UAE, KSA, Qatar, Bahrain, Kuwait, and Oman), which are geographically and politically alike and also enjoy oil income, affect the synchronization of their business cycles and make them have similar booms and busts? In this paper, we attempt to connect these two features and explore this question. Using various estimation methods (Common Correlated Effect Estimation, OLS, and GSL) and the data for these 6 countries from 1980-2012, we show that the trade patterns of the countries have a significant and positive effect on the synchronization of their business cycles. Knowing such Business Cycle Synchronization among countries and exploring its effective factors can be helpful for policymakers in making decisions.