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Firms' entry, monetary policy and the international business cycle

  • Cavallari, Lilia

This paper proposes a two-country monetary model with firm entry as a means for alleviating the comovement puzzles in international business cycle models. It shows that business formation can generate fluctuations in output, employment, investment and trade flows close to those in the data while at the same time providing positive international comovements. Simulations show that the presence of imported investment goods is essential for replicating these facts.

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File URL: http://www.sciencedirect.com/science/article/pii/S0022199613000718
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Article provided by Elsevier in its journal Journal of International Economics.

Volume (Year): 91 (2013)
Issue (Month): 2 ()
Pages: 263-274

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Handle: RePEc:eee:inecon:v:91:y:2013:i:2:p:263-274
DOI: 10.1016/j.jinteco.2013.07.002
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505552

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