Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/60569 
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dc.contributor.authorKose, M. Ayhanen
dc.contributor.authorYi, Kei-Muen
dc.date.accessioned2012-08-17T14:25:35Z-
dc.date.available2012-08-17T14:25:35Z-
dc.date.issued2002-
dc.identifier.urihttp://hdl.handle.net/10419/60569-
dc.description.abstractRecent empirical research finds that pairs of countries with stronger trade linkages tend to have more highly correlated business cycles. We assess whether the standard international business cycle framework can replicate this intuitive result. We employ a three-country model with transportation costs. We simulate the effects of increased goods market integration under two asset market structures: complete markets and international financial autarky. Our main finding is that under international financial autarky the model can generate stronger correlations for pairs of countries that trade more, but the increased correlation falls far short of the empirical findings. In our benchmark calibrations, the model explains at most 6 percent of the responsiveness of GDP correlations to trade found in the empirical research. This result is robust to many combinations of shock specifications, import shares, and elasticities of substitution. Because the difference between business cycle theory and the empirical results cannot be resolved by changes in parameter values and the structure of the standard models, we call this discrepancy the trade comovement problem.en
dc.language.isoengen
dc.publisher|aFederal Reserve Bank of New York |cNew York, NYen
dc.relation.ispartofseries|aStaff Report |x155en
dc.subject.jelF4en
dc.subject.ddc330en
dc.subject.keywordinternational trade, international business cycle comovementen
dc.subject.stwKonjunkturzusammenhangen
dc.subject.stwAußenwirtschaften
dc.subject.stwFinanzmarkten
dc.subject.stwSchätzungen
dc.subject.stwOECD-Staatenen
dc.titleThe trade comovement problem in international macroeconomics-
dc.typeWorking Paperen
dc.identifier.ppn359826423en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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