Industrial business cycle linkages between Taiwan and the United States: Evidence from the IT industry

Abstract

This paper uses a two-country model to investigate the international business cycle linkage in the information technology (IT) industry between Taiwan and the United States. Using panel Lagrange Multiplier unit root and panel cointegration analysis, we find that Taiwan's IT output is predominantly determined by supply-side factors such as the supply of IT parts from the United States. Our findings provide new insights in understanding the international business cycle linkage at the industrial level.