Conventional two-country RBC models interpret countercyclical net exports as reflecting, in large part, the dynamics of capital. I show that, quantitatively, theoretical economies rely on counterfactual terms of trade effects: trade fluctuations, on the contrary, are driven primarily by...

In the last 20 years the U.S. economy has experienced a strong reduction in the volatility of GDP growth. By some measures it has declined nearly by half. This paper identifies, documents and models the rapid growth of multinational corporations as a source of gradual decline in output and...

In this paper we present an extensive analysis of the consequences for global equilibrium determinacy of implementing active interest rate rules (i.e. monetary rules where the nominal interest rate responds more than proportionally to changes in inflation) in flexible-price open economies. We...

Emerging market economies are fertile ground for the development of real estate and other financial bubbles. Despite these economies' significant growth potential, their corporate and government sectors do not generate the financial instruments to provide residents with adequate stores of value....

This paper studies the changes in world business cycles during 1960-2003. We employ a Bayesian dynamic latent factor model to estimate common and country-specific components in the main macroeconomic aggregates of the Group of Seven (G-7) countries. We then quantify the relative importance of...

This paper analyzes the relationship between the real exchange rate and the business cycle in Japan during the floating rate period. A structural vector autoregression is used to identify different types of macroeconomic shocks that determine fluctuations in aggregate output and the real...

This paper compares business cycles in Asia and in Latin America using structural vector autoregression analysis with panel data. The evidence for countries in these regions suggests that (i) the main source of output fluctuations is supply shocks, even in the short run; (ii) the real exchange...

This paper examines the impact of rising trade and financial integration on international business cycle comovement among a large group of industrial and developing countries. The results provide at best limited support for the conventional wisdom that globalization has increased the degree of...

The paper investigates the determinants of business cycles synchronization across regions. It uses both international and intranational data to evaluate the linkages between trade in goods, trade in financial assets, specialization and business cycles synchronization using a system of...

This paper examines whether asset and goods market trade alone can explain the transmission of short term economic fluctuations between national economies. Three alternative mechanisms by which disturbances are transmitted are analyzed. One mechanism operates through variations in the rate of...