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Some Business Cycles Consequences of Signing Trade Agreements: The Case of NAFTA

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  • Bejan, Maria

Abstract

This paper investigates the effects of signing a trade agreement on the correlations of the business cycle fluctuations of consumption, investment and output between two countries. We construct an international business cycle model with trade costs and we calibrate it to the United States and Mexico in order to estimate the impact of NAFTA on their co-movements. Although there exist some discrepancies between the theory and data in the degree of correlation, the direction of change corresponds to the one in the data.

Suggested Citation

  • Bejan, Maria, 2006. "Some Business Cycles Consequences of Signing Trade Agreements: The Case of NAFTA," MPRA Paper 2807, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:2807
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    File URL: https://mpra.ub.uni-muenchen.de/2807/1/MPRA_paper_2807.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Patrick J. Kehoe & Fabrizio Perri, 2002. "International Business Cycles with Endogenous Incomplete Markets," Econometrica, Econometric Society, vol. 70(3), pages 907-928, May.
    3. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
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    Cited by:

    1. Agnieszka Domańska & Dobrmił Serwa, 2014. "Synchronizacja cykli koniunkturalnych a podatność gospodarek krajów Europy na skutki kryzysu gospodarczego 2008-2009," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 37.

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    More about this item

    Keywords

    International Business Cycles; Trade Agreements; International Co-movements;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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