Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189940 
Year of Publication: 
2017
Series/Report no.: 
Sveriges Riksbank Working Paper Series No. 340
Publisher: 
Sveriges Riksbank, Stockholm
Abstract: 
To what extent is the international business cycle affected by the fact that an essential input (oil) is traded on the world market? We quantify the contribution of oil by setting up a model with separate shocks to efficiencies of capital/labor and oil, as well as global shocks to the oil supply. We find that the shocks to the supply and the efficiency of oil both contribute to positive comovements. These two shocks are also relatively transitory, which induces high responses in output and low responses in consumption. As a consequence, the model resolves both the consumption correlation puzzle and the international comovement puzzle.
Subjects: 
International comovements
business cycles
oil
productivity
JEL: 
E32
F32
F41
Q43
Document Type: 
Working Paper

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