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dc.contributor.authorKose, M. Ayhanen_US
dc.contributor.authorYi, Kei-Muen_US
dc.date.accessioned2012-08-17T14:25:35Z-
dc.date.available2012-08-17T14:25:35Z-
dc.date.issued2002en_US
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_US
dc.language.isoengen_US
dc.publisherFederal Reserve Bank of New York New York, NYen_US
dc.relation.ispartofseriesStaff Report, Federal Reserve Bank of New York 155en_US
dc.subject.jelF4en_US
dc.subject.ddc330en_US
dc.subject.keywordinternational trade, international business cycle comovementen_US
dc.subject.stwKonjunkturzusammenhangen_US
dc.subject.stwAußenwirtschaften_US
dc.subject.stwFinanzmarkten_US
dc.subject.stwSchätzungen_US
dc.subject.stwOECD-Staatenen_US
dc.titleThe trade comovement problem in international macroeconomicsen_US
dc.typeWorking Paperen_US
dc.identifier.ppn359826423en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:Staff Reports, Federal Reserve Bank of New York

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