International Trade And Business Cycles
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International Trade And Business Cycles
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Author : Marianne Baxter
language : en
Publisher:
Release Date : 1995
International Trade And Business Cycles written by Marianne Baxter and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1995 with Business cycles categories.
Virtually all economies experience recurrent fluctuations in economic activity that persist for periods of several quarters to several years. Further, there is a definite tendency for the business cycles of developed countries to move together--there is a world component to business cycles. This paper argues that capital accumulation and international capital flows are central to understanding world trade and business cycles. In particular, fluctuations in net exports and the current account are shown to be dominated by trade in capital goods. The paper develops a two country model of international trade within which capital accumulation and international investment flows play a central role. We explore the channels by which technology shocks and fiscal shocks are transmitted to the domestic and foreign economies, and discuss the extent to which these results are sensitive to individuals' opportunities for international trade in financial assets. Overall, we find that the models capture many of the salient features of international business cycles. However, it has proven consistently difficult to generate sufficient comovement across countries in labor input and investment. The paper concludes with a discussion of fruitful directions for future research.
Essays On International Trade And Business Cycles
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Author : Daisoon Kim
language : en
Publisher:
Release Date : 2019
Essays On International Trade And Business Cycles written by Daisoon Kim and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
This research investigates how international trade and business cycles vary with characteristics of industries. The first chapter documents cost side industry heterogeneity across narrowly defined industries. The second and third chapters study the short run (international business cycle) and long run (home market effect) phenomenon, respectively. The research contributes to a better understanding of how the supply side industry heterogeneity plays a vital role in international trade and macroeconomics. The first chapter provides a method to estimate the cost structure. The approach relies on cost minimization and free entry condition with frictions, which allows decomposing sources of economies of scale into a sloping marginal cost curve and fixed cost. The US manufacturing industry data show that industry-level economies of scale are more strongly associated with marginal costs than fixed costs. The second chapter shows that the industry's international business cycle patterns vary systemically by the slopes. In industries with decreasing marginal costs, output, imports, and exports are all more correlated with aggregate GDP than in industries with increasing marginal costs. To rationalize the observed patterns, this chapter introduces sloping marginal cost curves and their variations across industries in an open economy macroeconomic model. It delivers endogenous export gains/losses and within-firm links between domestic and export markets which generate two attractive features of the model: (i) it raises model-implied cross-country aggregate GDP comovements which are close to the data, and (ii) it reproduces observed industrial international business cycle patterns. The results suggest that sloping marginal cost curves and their heterogeneity are informative to understand the international business cycle. The third chapter studies how industry characteristics determine the home market effect: the impact of country size on trade surplus and the location of industries. This chapter constructs a two-country multi-industry new trade model that allows for various supply- and demand-side industry characteristics. A novel feature of the model is that economies of scale arise not just from fixed costs, but also from sloping marginal cost curves. The model predicts that large countries have a higher concentration of industries in which (i) marginal costs are an important source of economies of scale, and (ii) products are more differentiated. This chapter tests these theoretical predictions using a gravity-based specification and introduces instrumental variables to fix measurement error and proxy problems. The empirical results are consistent with the main predictions of the model. The results show that the primary building blocks of new trade theory, economies of scale and product differentiation, are central to understanding international trade patterns in narrowly defined industries. The research supposes that a non-linear cost function and variations in cost structure across industries improve our understanding of international trade and business cycles.
International Trade And The Business Cycle
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Author : Mr.Eswar Prasad
language : en
Publisher: International Monetary Fund
Release Date : 1999-04-01
International Trade And The Business Cycle written by Mr.Eswar Prasad and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 1999-04-01 with Business & Economics categories.
This paper develops a new empirical framework for analyzing the dynamics of the trade balance in response to different types of macroeconomic shocks. The model provides a synthetic perspective on the conditional correlations between the business cycle and the trade balance that are generated by different shocks and attempts to reconcile these results with unconditional correlations found in the data. The results suggest that, in the post-Bretton Woods period, nominal shocks have been an important determinant of the forecast error variance for fluctuations in the trade balances of the Group of Seven countries.
Business Cycle Synchronization And Regional Integration
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Author : Norbert Fiess
language : en
Publisher: World Bank Publications
Release Date : 2005
Business Cycle Synchronization And Regional Integration written by Norbert Fiess and has been published by World Bank Publications this book supported file pdf, txt, epub, kindle and other format this book has been release on 2005 with Business Cycle categories.
Abstract: In early January 2003, the United States and Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua launched official negotiations for the Central American Free Trade Agreement (CAFTA), a treaty that would expand NAFTA-style trade barrier reductions to Central America. With deeper trade integration between Central America and the United States, it is expected that there will be closer links in business cycles between Central American countries and the United States. The paper finds a relatively low degree of business cycle synchronization within Central America as well as between Central America and the United States. The business cycle synchronization is expected to increase only modestly with further trade expansion, making the coordination of macroeconomic policies within CAFTA somewhat less of a priority.
Trade Finance Specialization And Synchronization
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Author : Mr.Jean Imbs
language : en
Publisher: International Monetary Fund
Release Date : 2003-04-01
Trade Finance Specialization And Synchronization written by Mr.Jean Imbs and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003-04-01 with Business & Economics categories.
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 simultaneous equations. The results are as follows: (i) Simultaneity is important, as both trade and financial openness have a direct and an indirect effect on cycle synchronization. (ii) A variety of alternative measures of financial integration suggest that regions with strong financial links are significantly more synchronized, though they are also more specialized. (iii) Specialization patterns have a sizable effect on business cycles, beyond their reflection of intra-industry trade, and of openness to goods and assets trade. (iv) The estimated role of trade is in line with existing models once intra-industry trade is controlled for. The results relate to a recent strand of international business cycle models with incomplete markets and transport costs, and, on the empirical side, point to an important omission in the usual criteria defining an optimal currency area, namely specialization patterns.
Dollar Invoicing Global Value Chains And The Business Cycle Dynamics Of International Trade
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Author : Mr. David Cook
language : en
Publisher: International Monetary Fund
Release Date : 2022-02-11
Dollar Invoicing Global Value Chains And The Business Cycle Dynamics Of International Trade written by Mr. David Cook and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-02-11 with Business & Economics categories.
Recent literature has highlighted that international trade is mostly priced in a few key vehicle currencies and is increasingly dominated by intermediate goods and global value chains (GVCs). Taking these features into account, this paper reexamines the relationship between monetary policy, exchange rates and international trade flows. Using a dynamic stochastic general equilibrium (DSGE) framework, it finds key differences between the response of final goods and GVC trade to both domestic and foreign shocks depending on the origin and ultimate destination of value added and the intermediate shipments involved. For example, the model shows that in response to a dollar appreciation triggered by a US interest rate increase, direct bilateral trade between non-US countries contracts more than global value chain oriented trade which feeds US final demand, and exports to the US decline much more when measured in gross as opposed to value added terms. We use granular data on GVCs at the sector level to document empirical evidence in favor of these key predictions of the model.
International Trade And Business Cycle Synchronization In Poland The European Union And The Euro Zone
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Author : Piotr Misztal
language : en
Publisher:
Release Date : 2013
International Trade And Business Cycle Synchronization In Poland The European Union And The Euro Zone written by Piotr Misztal and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
The analysis of business cycle synchronization levels has become a key point in the discussion of the processes of international economic integration. Economists show a particular interest in analyzing the frequency of processes of business cycle convergence and divergence (decoupling) in the European Union, especially in the Euro Zone. One of the factors determining business cycle convergence in economies is the intensity and structure of international trade. The aim of this paper is to analyze the influence exerted by international trade over the synchronization of business cycles in Poland, the European Union and the Euro Zone from 1995 to 2011. The analytical methods employed here encompass a review of the literature on macroeconomics and international finance, as well as econometric models (such as the Vector Autoregression Model). The results of empirical research indicate that an increase in trade turnover does not necessarily lead to greater business cycle synchronization in the economies under analysis. In fact, the impact of an increase in countries' turnover on the synchronization of their business cycles depends predominantly on the structure of trade turnover and not solely on the intensity of trade.
Trade Linkages And International Business Cycle Comovement Evidence From Korean Industry Data
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Author : Dongyeol Lee
language : en
Publisher: International Monetary Fund
Release Date : 2019-05-24
Trade Linkages And International Business Cycle Comovement Evidence From Korean Industry Data written by Dongyeol Lee and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-05-24 with Business & Economics categories.
Through the 2000s, Korea’s export and import linkages to advanced and emerging markets increased significantly. At the same time, the correlation of output growth between Korea and these economies rose. This paper investigates the nature of the link between trade linkages and the comovement of international business cycles (BC) using Korean industry-level domestic and international input-output data. The results suggest that, at the industry-level, higher export linkages lead to a larger positive GDP growth comovement, while higher import linkages lead to higher negative employment growth comovement. Furthermore, the decomposition of aggregate BC comovement shows that the increase in trade with China has contributed the most to aggregate BC comovement, while the impact of trade linkages on BC comovement is propagated domestically via vertical linkages. These findings suggest that the Korean economy can be significantly affected by a few countries that are highly linked through trade to Korea and/or a few industries that are highly interconnected to other industries.
Understanding The Implications Of Trade And Financial Market Integration For Business Cycles
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Author : Mario J. Crucini
language : en
Publisher: World Scientific Publishing Company
Release Date : 2020
Understanding The Implications Of Trade And Financial Market Integration For Business Cycles written by Mario J. Crucini and has been published by World Scientific Publishing Company this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020 with Business cycles categories.
This volume is a collection of the author's scholarly work spanning a quarter century of inquiry into the causes of international business cycles. It starts with an introduction to international business cycle research. Part I reviews salient business cycle facts relating to quantities, prices and the driving forces of business cycles. Part II focuses on the role of risk-sharing and asset market structure in shaping business cycles and welfare. Part III deals with relative prices and the terms of trade stressing retail distribution, information frictions, and the need to tie commodity-specific shocks to particular nations or world regions. Part IV is a collection of work focusing on the inefficiencies brought about by the Hawley-Smoot tariffs and foreign retaliation. Further, because the tariffs were often specific (nominal amounts per physical quantity imported), they interacted with monetary policy in a way that exacerbated the Great Depression. The book provides the reader with an overview of key developments in international business cycle research that build upon the pioneering work of Nobel Laureates Finn Kydland and Edward Prescott, who built the first dynamic stochastic general equilibrium model of the closed economy, patterned along the lines of the US economy. As globalization has extended the span of international economic relationships, these modeling approaches have become essential for understanding business cycles today. These models and empirical methods are particularly relevant to our understanding of how domestic innovation, productivity change or policy action (fiscal, monetary and trade-related) feeds back across economies.
The Product Life Cycle And International Trade
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Author : Louis T. Wells
language : en
Publisher: Division of Research Graduate School of Business Administrat
Release Date : 1972
The Product Life Cycle And International Trade written by Louis T. Wells and has been published by Division of Research Graduate School of Business Administrat this book supported file pdf, txt, epub, kindle and other format this book has been release on 1972 with Business & Economics categories.
Monographic compilation of economic research articles relating to trade and the industrial product life cycle - includes studies relating to specific industries and countries and the export market. Graphs, references and statistical tables.