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Some Business Cycle Consequences of Trade Agreements:The Case of the North American Free Trade Agreement

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  • Maria Bejan

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

  • Maria Bejan, 2007. "Some Business Cycle Consequences of Trade Agreements:The Case of the North American Free Trade Agreement," RSCAS Working Papers 2007/03, European University Institute.
    • Handle: RePEc:rsc:rsceui:2007/03
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    References listed on IDEAS

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    Cited by:

    1. Claudia S. Gómez-López & Luis A. Puch, 2008. "Uso de Energía en Economías Exportadoras de Petróleo," Economic Reports 24-08, FEDEA.
    2. Mar𨀠 P𨁏livero & Robert Madak, 2013. "Financial integration within Europe and the international transmission of business cycles among industrialized countries," Applied Economics, Taylor & Francis Journals, vol. 45(1), pages 111-122, January.

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