IDEAS home Printed from https://ideas.repec.org/p/red/sed006/473.html
   My bibliography  Save this paper

"News" Shocks in International Business Cycles

Author

Listed:
  • Martial Dupaigne
  • Franck Portier

    () (Economics Universite de Toulouse)

Abstract

This paper studies co-movement in economic aggregates at the national and international level. At the national level, consumption, investment and hours worked display positive co-movement across the business cycle. Technology shocks, which directly affect the real wage rate, can drive consumption and hours worked in the same direction although consumption and leisure are both normal goods. At the international level, business cycles are substantially synchronized. The well-known first order effect of a technology shock is to reallocate production factor across countries, leading to strong negative co-movements between investments or between outputs. Such predictions are at odds with observed international fluctuations. We investigate whether observed co-movements can be accounted for by the changes in expectations emphasized in Beaudry & Portier [2004,2005]. Previous results have established the conditions under which expectations-driven business cycle fluctuations may arise in neo-classical settings, namely a cost complementarity. We extend this complementarity to a multi-country model, and show that they can lead to international expectations-driven business cycles.

Suggested Citation

  • Martial Dupaigne & Franck Portier, 2006. ""News" Shocks in International Business Cycles," 2006 Meeting Papers 473, Society for Economic Dynamics.
  • Handle: RePEc:red:sed006:473
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mario Forni & Luca Gambetti & Luca Sala, 2014. "No News in Business Cycles," Economic Journal, Royal Economic Society, vol. 124(581), pages 1168-1191, December.

    More about this item

    Keywords

    Macro; International Business Cycles; News Shocks;

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed006:473. 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: (Christian Zimmermann). General contact details of provider: http://edirc.repec.org/data/sedddea.html .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.