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The World Has More Than Two Countries: Implications of Multi- Country International Real Business Cycle Models

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  • Hirokazu Ishise

    (Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: hirokazu.ishise@boj.or.jp))

Abstract

The cross-country correlations of international real business cycle models depend critically on the number of countries in the models. A positive productivity shock in one country will stimulate investment in the country that has experienced the shock, while reducing internal investment in the other countries, which will then simultaneously experience a slump. This comovement mechanism is absent in two-country models.

Suggested Citation

  • Hirokazu Ishise, 2011. "The World Has More Than Two Countries: Implications of Multi- Country International Real Business Cycle Models," IMES Discussion Paper Series 11-E-11, Institute for Monetary and Economic Studies, Bank of Japan.
    • Handle: RePEc:ime:imedps:11-e-11
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    References listed on IDEAS

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    Cited by:

    1. Myunghyun Kim, 2020. "Does The Number Of Countries In International Business Cycle Models Matter?," Economic Inquiry, Western Economic Association International, vol. 58(3), pages 1414-1429, July.
    2. Juvenal, Luciana & Santos Monteiro, Paulo, 2017. "Trade and synchronization in a multi-country economy," European Economic Review, Elsevier, vol. 92(C), pages 385-415.
    3. Robert C. Johnson, 2014. "Trade in Intermediate Inputs and Business Cycle Comovement," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(4), pages 39-83, October.
    4. Luciana Juvenal, Luciana & Santos Monteiro, Paulo, 2010. "Trade and Synchronization in a Multi-Country Economy," CAGE Online Working Paper Series 31, Competitive Advantage in the Global Economy (CAGE).

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    Keywords

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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