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This paper re-examines the relationship between trade intensity and business cycle synchronization for 21 OECD countries during 1970-2003. Instead of using instrumental variables, we estimate a multivariate model including variables capturing specialisation, financial integration, and similarity of economic policies. We confirm that trade intensity affects business cycle synchronization, but the effect is much smaller than previously reported. Other factors in our model have a similar impact on business cycle synchronization as trade intensity. Finally, we find that the effect of trade on business cycle synchronisation is not driven by outliers and does not suffer from parameter heterogeneity.

This paper studies procyclical productivity growth at the industry level in the United States and three European countries (France, Germany and the Netherlands). Industry‐specific demand‐side instruments are used to examine the prevalence of non‐constant returns to scale and unmeasured input utilization. For the aggregate US economy, unmeasured input utilization seems to explain procyclical productivity. However, this correction still leaves one in three US industries with procyclical productivity. This failure of the model can also be seen in Europe and is mostly concentrated in services industries.

We argue that models of banks as processors of information and transactions imply a quantity measure of bank output based on transaction counts instead of balances of loans and deposits. Compiling new and comparable real output measures for the USA and a range of European countries, we show that counts‐based output series exhibit substantially different growth patterns than balances‐based output series. Since the US official statistics rely on counts while European statistics rely on balances, this implies that comparisons of bank output growth between Europe and the USA are biased.

Cross-country studies of economic growth have been hampered by the scarcity of reliable data on productivity at the industry level; see Bernard and Jones [American Economic Review, 91 (4) (2001) 1168-1169] and Rogerson [Journal of Political Economy, 116 (2) (2008), 235-259]. We bring together literature on industry prices, human capital. and capital assets to construct industry-level productivity measures that are well grounded in neoclassical production theory. These theory-based measures differ widely from the crude measures commonly used in the literature. We use these to confirm and strengthen the finding of Bernard and Jones [American Economic Review, 86 (5) (1996), 1216-1238] that for advanced OECD Countries, patterns of convergence across sectors have differed since 1970: whereas productivity in market services converged, there is no convergence in manufacturing. More detailed analysis confirms that patterns of convergence are highly industry-specific. There is no dominant convergence trend in sectoral productivity growth across advanced countries.

The role of technology shocks as a driver of the Great Depression is the topic of our own earlier work and the paper by Watanabe in this issue. While the two studies differ in their data and assumptions, they complement each other and strengthen the conclusion of both papers: technology shocks were not the driving force of the Great Depression.