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International Trade over the Business Cycle: Stylized Facts and Remaining Puzzles

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Abstract

Using quarterly national accounts for 19 industrialized economies, the business cycle behavior of trade related aggregates and prices is assessed. Emphasis is put on the distinction between small, relatively open, and large, relatively closed, economies. Comparing those facts with the computational experiments of international real business cycle models, several puzzles are studied or uncovered. Finally, we determine which fatcs are crucial for international business cycle models, that is, in which direction current research should pursue. Nous étudions, pour 19 pays industrialisés, le comportement cyclique d'agrégats et de prix trimestriels liés au commerce international. La distinction entre les petits pays, plus ouverts, et les grands pays, relativement fermés au commerce extérieur, est mise en évidence. En comparant ces faits stylisés avec les prédictions de modèles internationaux du cycle réel, nous analysons plusieurs énigmes, dont certaines sont nouvelles. Finalement, nous déterminons quels faits stylisés sont cruciaux pour un modèle international du cycle, donc dans quelle direction la recherche doit s'orienter.

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Bibliographic Info

Paper provided by CREFE, Université du Québec à Montréal in its series Cahiers de recherche CREFE / CREFE Working Papers with number 37.

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Length: 39 pages
Date of creation: Mar 1995
Date of revision: Aug 1997
Handle: RePEc:cre:crefwp:37

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Keywords: open economy macroeconomics; international trade; business cycles; small countries;

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References

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  1. Zimmermann, Christian, 1999. "International Business Cycles and Exchange Rates," Review of International Economics, Wiley Blackwell, vol. 7(4), pages 682-98, November.
  2. David K. Backus & Patrick J. Kehoe & Finn E. Kydland, 1987. "International real business cycles," Working Papers 426, Federal Reserve Bank of Minneapolis.
  3. Martin Feldstein & Charles Horioka, 1979. "Domestic Savings and International Capital Flows," NBER Working Papers 0310, National Bureau of Economic Research, Inc.
  4. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-70, November.
  5. Tesar, L.L., 1988. "Savings, Investment And International Capital Flows," Papers 64, Brookings Institution - Working Papers.
  6. Alan C. Stockman & Linda L. Tesar, 1991. "Tastes and technology in a two-country model of the business cycle: explaining international co-movements," Working Paper 9019, Federal Reserve Bank of Cleveland.
  7. Finn E. Kydland & Edward C. Prescott, 1990. "Business cycles: real facts and a monetary myth," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Spr, pages 3-18.
  8. Cooley, Thomas F. & Ohanian, Lee E., 1991. "The cyclical behavior of prices," Journal of Monetary Economics, Elsevier, vol. 28(1), pages 25-60, August.
  9. Zimmermann, Christian, 1997. "International real business cycles among heterogeneous countries," European Economic Review, Elsevier, vol. 41(2), pages 319-356, February.
  10. David K. Backus & Patrick J. Kehoe & Finn E. Kydland, 1993. "International Business Cycles: Theory and Evidence," Working Papers 93-21, New York University, Leonard N. Stern School of Business, Department of Economics.
  11. Marianne Baxter & Mario J. Crucini, 1992. "Business cycles and the asset structure of foreign trade," Discussion Paper / Institute for Empirical Macroeconomics 59, Federal Reserve Bank of Minneapolis.
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  16. Baxter, Marianne & Stockman, Alan C., 1989. "Business cycles and the exchange-rate regime : Some international evidence," Journal of Monetary Economics, Elsevier, vol. 23(3), pages 377-400, May.
  17. Christian Zimmermann, 1994. "Technology Innovations and the Volatility of Output: An International Perspective," Cahiers de recherche CREFE / CREFE Working Papers 34, CREFE, Université du Québec à Montréal.
  18. Danthine, Jean-Pierre & Girardin, Michel, 1989. "Business cycles in Switzerland : A comparative study," European Economic Review, Elsevier, vol. 33(1), pages 31-50, January.
  19. Marianne Baxter & Alan C. Stockman, 1988. "Business Cycles and the Exchange Rate System: Some International Evidence," NBER Working Papers 2689, National Bureau of Economic Research, Inc.
  20. Peter Brandner & Klaus Neusser, 1992. "Business cycles in open economies: Stylized facts for Austria and Germany," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 128(1), pages 67-87, March.
  21. Crucini, Mario J, 1997. "Country Size and Economic Fluctuations," Review of International Economics, Wiley Blackwell, vol. 5(2), pages 204-20, May.
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  26. Fiorito, Riccardo & Kollintzas, Tryphon, 1994. "Stylized facts of business cycles in the G7 from a real business cycles perspective," European Economic Review, Elsevier, vol. 38(2), pages 235-269, February.
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Citations

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Cited by:
  1. Ambler, Steve & Cardia, Emanuela & Zimmermann, Christian, 2002. "International transmission of the business cycle in a multi-sector model," European Economic Review, Elsevier, vol. 46(2), pages 273-300, February.
  2. Steve Ambler & Emanuela Cardia, 1994. "Les modèles réels de la transmission internationale du cycle économique," Cahiers de recherche CREFE / CREFE Working Papers 32, CREFE, Université du Québec à Montréal.
  3. Christian Zimmermann, 2001. "Forecasting with Real Business Cycle Models," Cahiers de recherche CREFE / CREFE Working Papers 131, CREFE, Université du Québec à Montréal.
  4. Pacheco Jiménez, J.F., 2001. "Business cycles in small open economies: the case of Costa Rica," ISS Working Papers - General Series 19075, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
  5. M. Ayhan Kose & William Blankenau, 2006. "How Different is the Cyclical Behavior of Home Production Across Countries?," IMF Working Papers 06/46, International Monetary Fund.
  6. Eva Ortega, . "The Spanish business cycle and its relationship to Europe," Studies on the Spanish Economy 09, FEDEA.
  7. Christian Zimmermann, 1996. "International Real Business Cycles among Heterogeneous Countries," Macroeconomics 9607002, EconWPA.
  8. Almuth Scholl, 2002. "Limited Enforceable International Loans, International Risk Sharing and Trade," SFB 649 Discussion Papers SFB649DP2005-055, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany, revised Aug 2005.
  9. Cook, David, 2002. "Market entry and international propagation of business cycles," Journal of International Economics, Elsevier, vol. 56(1), pages 155-175, January.
  10. Afonso, António & Furceri, Davide, 2008. "Government size, composition, volatility and economic growth," Working Paper Series 0849, European Central Bank.
  11. Michael Gail, 1998. "Stylized Facts and International Business Cycles - The German Case," Volkswirtschaftliche Diskussionsbeiträge 69-98, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht, revised 09 Jul 2000.

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