IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

International Business Cycles with Mutliple Input Investment Technologies

  • Oviedo, P. Marcelo
  • Singh, Rajesh
Registered author(s):

    Backus, Kehoe, and Kydland (International Real Business Cycles, JPE, 100 (4), 1992) documented several discrepancies between the observed post-war business cycles of developed countries and the predictions of a two-country, complete-market model. The main discrepancy dubbed as the quantity anomaly, that cross-country consumption correlations are higher than that of output in the model as opposed to the data, has remained a central puzzle in international economics. The main thesis of this paper is that when the standard two-country model with traded and non-traded goods and complete ¯nancial markets, as in Stockman and Tesar (Tastes and Technology in a Two Country Model of the Business Cycles: Explaining International Comovements, 85 (1), AER, 1995) is extended to include capital goods sectors that utilize both traded and non-traded goods as intermediates, and when the non-traded aggregate is reclassi¯ed to include distribution and transportation services, the model produces the correct ordering of the cross-country correlations of consumption and output.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www2.econ.iastate.edu/papers/p12800-2011-04-30.pdf
    Download Restriction: no

    Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers Archive with number 32800.

    as
    in new window

    Length:
    Date of creation: 31 Mar 2008
    Date of revision:
    Handle: RePEc:isu:genres:32800
    Contact details of provider: Postal:
    Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070

    Phone: +1 515.294.6741
    Fax: +1 515.294.0221
    Web page: http://www.econ.iastate.edu
    Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Timothy J. Kehoe & Kim J. Ruhl, 2008. "Are Shocks to the Terms of Trade Shocks to Productivity?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 804-819, October.
    2. Giancarlo Corsetti & Luca Dedola & Sylvain Leduc, 2005. "International risk-sharing and the transmission of productivity shocks," International Finance Discussion Papers 826, Board of Governors of the Federal Reserve System (U.S.).
    3. Backus, David K. & Smith, Gregor W., 1993. "Consumption and real exchange rates in dynamic economies with non-traded goods," Journal of International Economics, Elsevier, vol. 35(3-4), pages 297-316, November.
    4. Ariel T. Burstein & Joao C. Neves & Sergio Rebelo, 2000. "Distribution Costs and Real Exchange Rate Dynamics During Exchange-Rate-Based Stabilizations," RCER Working Papers 473, University of Rochester - Center for Economic Research (RCER).
    5. Corsetti, Giancarlo & Dedola, Luca, 2003. "Macroeconomics of International Price Discrimination," CEPR Discussion Papers 3710, C.E.P.R. Discussion Papers.
    6. Mendoza, Enrique G, 1995. "The Terms of Trade, the Real Exchange Rate, and Economic Fluctuations," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(1), pages 101-37, February.
    7. Rudolfs Bems, 2008. "Aggregate Investment Expenditures on Tradable and Nontradable Goods," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 852-883, October.
    8. Alan C. Stockman & Linda L. Tesar, 1990. "Tastes and Technology in a Two-Country Model of the Business Cycle: Explaining International Comovements," NBER Working Papers 3566, National Bureau of Economic Research, Inc.
    9. Goldberg, Linda S. & Campa, Jose M., 2006. "Distribution margins, imported inputs, and the insensitivity of the CPI to exchange rates," IESE Research Papers D/625, IESE Business School.
    10. Jonathan Heathcote & Fabrizio Perri, 2003. "Why Has the U.S. Economy Become Less Correlated with the Rest of the World?," American Economic Review, American Economic Association, vol. 93(2), pages 63-69, May.
    11. Steve Ambler & Emanuela Cardia & Christian Zimmermann, 1998. "International Transmission of the Business Cycle in a Multi-Sectoral Model," Cahiers de recherche CREFE / CREFE Working Papers 60, CREFE, Université du Québec à Montréal.
    12. Kollmann, Robert, 1996. "Incomplete asset markets and the cross-country consumption correlation puzzle," Journal of Economic Dynamics and Control, Elsevier, vol. 20(5), pages 945-961, May.
    13. Michael R. Pakko, 1996. "International risk sharing and low cross-country consumption correlations: are they really inconsistent?," Working Papers 1994-019, Federal Reserve Bank of St. Louis.
    14. Michael A. Kouparitsas, 1996. "North-South financial integration and business cycles," Working Paper Series, Macroeconomic Issues WP-96-10, Federal Reserve Bank of Chicago.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:isu:genres:32800. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Curtis Balmer)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.