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We revisit evidence on world cycles using a new quarterly macrofinancial
dataset covering a broad set of countries from 1950 to
the COVID-19 crisis. By filling historical data gaps, we show
that previous studies overstated the influence of global factors on
national GDP and credit fluctuations. Our central finding is a
novel disconnect: asset prices have become increasingly synchronized
under financial globalization, whereas output synchronization
has remained low and stable. We propose a parsimonious
model in which deeper financial integration raises risk-sharing and
asset-price co-movement while encouraging riskier, less correlated
production structures, thereby reconciling the observed patterns.
