Medium Term Business Cycles in Developing Countries

Diego Comin, Norman Loayza (), Farooq Pasha and Luis Serven ()
Additional contact information
Luis Serven: World Bank - Office of the Chief Economist

No 10-029, Harvard Business School Working Papers from Harvard Business School

Abstract: We build a two country asymmetric DSGE model with two features: (i) endogenous and slow diffusion of technologies from the developed to the developing country, and (ii) adjustment costs to investment flows. We calibrate the model to match the Mexico-U.S. trade and FDI flows. The model is able to explain the following stylized facts: (i) U.S. and Mexican output co-move more than consumption; (ii) U.S. shocks have a larger effect on Mexico than in the U.S.; (iii) U.S. business cycles lead over medium term fluctuations in Mexico; (iv) Mexican consumption is more volatile than output.

Keywords: Business Cycles in Developing Countries; Co-movement between Developed and Developing economies; Volatility; Extensive Margin of Trade; Product Life Cycle; FDI. (search for similar items in EconPapers)
JEL-codes: E3 O3 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2009-10, Revised 2010-09
New Economics Papers: this item is included in nep-bec, nep-cba, nep-dge, nep-mac and nep-opm
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Citations: View citations in EconPapers (6)

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http://www.hbs.edu/research/pdf/10-029.pdf Revised version, 2010 (application/pdf)

Related works:
Journal Article: Medium Term Business Cycles in Developing Countries (2014)
Working Paper: Medium Term Business Cycles in Developing Countries (2011)
Working Paper: Medium Term Business Cycles in Developing Countries (2009)
Working Paper: Medium-term business cycles in developing countries (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:hbs:wpaper:10-029

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