This paper explores the sectoral dimension of emerging market business cycles by building a two-sector small open economy real business cycle model featuring a working capital requirement, variable capital utilization and imported inputs in production. The primary finding is that the price of...

The recent episodes of capital flows to emerging market economies in the aftermath of the global financial crisis once again highlighted the importance of appropriate policy design to cope with strong and volatile capital flows, that are effective not only during surges but also during...