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The International Transmission of Real Business Cycles

Author

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  • Frédérique Bec

    (THEMA - Théorie économique, modélisation et applications - UCP - Université de Cergy Pontoise - Université Paris-Seine - CNRS - Centre National de la Recherche Scientifique, CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper develops a simple one-sector, two-country equilibrium model which accounts for the relatively low cross-country consumption correlations without damaging the areas of success of existing models. This improvement arises from the modification of the consumption index in order to add public consumption to private consumption in the preferences of the agents, which allows shocks to government purchases to alter the marginal utility of consumption. This model explains quite well both the high correlation between saving and investment and the counter-cyclically of net exports. However, only a strong cross-correlation of home and foreign technology shocks enables the model to mimic the crosscountry correlation of output.

Suggested Citation

  • Frédérique Bec, 1995. "The International Transmission of Real Business Cycles," Post-Print halshs-01319126, HAL.
    • Handle: RePEc:hal:journl:halshs-01319126
    DOI: 10.1007/978-3-642-57817-5_5
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    Cited by:

    1. Michael Gail, 1998. "Stylized Facts and International Business Cycles - The German Case," Volkswirtschaftliche Diskussionsbeiträge 69-98, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht, revised 2000.
    2. Royuela, Vicente, 2000. "International Real Business Cycles: Can A Two Countries Two Sectors Model Solve The Quantity Anomaly?," ERSA conference papers ersa00p203, European Regional Science Association.

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