scholarly journals Does the Number of Countries in an International Business Cycle Model Matter?

2019 ◽  
Author(s):  
Myunghyun Kim
Keyword(s):  
Business Cycle ◽  
International Business ◽  
Cycle Model ◽  
International Business Cycle ◽  
Business Cycle Model

International Transmission of Shocks in a Business-Cycle Model Under Imperfect Competition

1999 ◽  
Vol 3 (3) ◽  
pp. 341-367 ◽  
Author(s):  
Angel J. Ubide
Keyword(s):  
Business Cycle ◽  
International Business ◽  
Imperfect Competition ◽  
Monopolistic Competition ◽  
Technology Shocks ◽  
Cycle Model ◽  
International Transmission ◽  
Model Driven ◽  
International Business Cycle ◽  
Business Cycle Model

This paper investigates the effects of introducing imperfect competition in an international business-cycle model. We provide some international evidence on markups and analyze the implications of increasing returns to scale and monopolistic competition for the effects and the international transmission of technology and government spending shocks. We also consider exogenous markup fluctuations as a source of shocks and of transmission of business cycles. We show that imperfect competition improves the behavior of a standard model driven by technology shocks, although the behavior of foreign trade variables remains unexplained. We also show that an imperfectly competitive model driven by government shocks can explain the international business cycle at least as well as a model driven by technology shocks.

scholarly journals AGENCY COSTS, RISK SHOCKS, AND INTERNATIONAL CYCLES

2017 ◽  
Vol 22 (5) ◽  
pp. 1134-1172 ◽  
Author(s):  
Marc-André Letendre ◽  
Joel Wagner
Keyword(s):  
International Business ◽  
Agency Costs ◽  
The United States ◽  
Relative Price ◽  
Credit Spread ◽  
Technology Shocks ◽  
Cycle Model ◽  
International Business Cycle ◽  
Business Cycle Model ◽  
Area Data

We add agency costs into a two-country, two-good international business-cycle model. In our model, changes in the relative price of investment arise endogenously. Despite the fact that technology shocks are uncorrelated across countries, the relative price of investment is positively correlated across countries in our model, much as it is in detrended U.S./Euro-area data. We also find that financial frictions tend to increase the volatility of the terms of trade and the international correlations of consumption, hours worked, output, and investment. We then compare this model to an alternative model that also includes risk shocks. We use credit spread data (for the United States) to calibrate the AR(1) process for risk shocks. We find that risk shocks are too small to significantly impact the model's dynamics.

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