This paper examines the impact of rising trade and financial integration on international
business cycle comovement among a large group of industrial and developing countries.
The results provide at best limited support for the conventional wisdom that globalization
has increased the degree of synchronization of business cycles. The evidence that
trade and financial integration enhance global spillovers of macroeconomic fluctuations
is stronger for industrial countries. One striking result is that, on average, cross-country
consumption correlations have not increased in the 1990s, precisely when financial
integration would have been expected to result in better risk-sharing opportunities,
especially for developing countries.