This paper examines the effects of trade costs on macroeconomic volatility. We first construct a dynamic, two-country general equilibrium model, where the degree of market integration depends directly on trade costs (transport costs, tariffs, etc.). The model is a extension of Obstfeld and...

Substantial evidence suggests that countries with stronger trade linkages have more synchro- nized business cycles. The standard international business cycle framework cannot replicate this finding, uncovering the trade-comovement puzzle. In this paper we investigate the extent to which more...

This chapter discusses the salient features of international trade and business cycles and summarizes the contributions of a particular branch of the literature on open economy macroeconomics. Becasue many macroeconomic time series are nonstationary, the computation of moments requires that the...

A large body of cross-country empirical evidence identifies monetary policy and trade integration as key determinants of business cycle co-movement. Partially consistent with this, many argue that the re-emergence of the gold standard allowed for the global transmission of a deflationary shock...

In this paper we examine the extent of international trade synchronization during periods of international trade collapses and US recessions. Using dynamic correlations based on monthly trade data for the G7 economies over the period 1961–2011, our results suggest rather idiosyncratic patterns...