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Business Cycles and Exchange Rate Regimes

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Abstract

Are business cycles different according to the exchange rate regime? Baxter & Stockman (1989) have inconclusive results. We reinvestigate this question with more recent data and a different methodology and find evidence, for some aggregates, that their business cycle behavior has changed. We then try to replicate this change with an international real business cycle model with exchange rate shocks. Les cycles économiques sont-ils différents selon le régime de taux de change? Baxter & Stockman (1989) n'obtiennent pas de réponse définitive à cette question. Nous la réexaminons avec des données plus récentes et une méthodologie différente et trouvons qu'il y a eu changement, du moins pour certains agrégats économiques. Ensuite, nous cherchons à répliquer ce fait au moyen d'un modèle du cycle réel international augmenté de chocs exogènes sur le taux de change réel.

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  • Christian Zimmermann, 1996. "Business Cycles and Exchange Rate Regimes," Cahiers de recherche CREFE / CREFE Working Papers 45, CREFE, Université du Québec à Montréal.
    • Handle: RePEc:cre:crefwp:45
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    References listed on IDEAS

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    1. Backus, David K & Kehoe, Patrick J & Kydland, Finn E, 1994. "Dynamics of the Trade Balance and the Terms of Trade: The J-Curve?," American Economic Review, American Economic Association, vol. 84(1), pages 84-103, March.
    2. Zimmermann, Christian, 1997. "International real business cycles among heterogeneous countries," European Economic Review, Elsevier, vol. 41(2), pages 319-356, February.
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    7. Christian Zimmermann, 1994. "Technology Innovations and the Volatility of Output: An International Perspective," Cahiers de recherche CREFE / CREFE Working Papers 34, CREFE, Université du Québec à Montréal.
    8. Zimmermann, Christian, 1999. "International Business Cycles and Exchange Rates," Review of International Economics, Wiley Blackwell, vol. 7(4), pages 682-698, November.
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    More about this item

    Keywords

    open economy macroeconomics; real business cycle models; exchange rates; international trade;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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