Sources and Propagation of International Cycles: Common Shocks or Transmission?

Fabio Canova () and Jane Marrinan

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: This paper studies the generation and transmission of international cycles in a multi-country model with production and consumption interdependencies. Two sources of disturbance are considered and three channels of propagation are compared. In the short run the contemporaneous correlation of disturbances determines the main features of the transmission. In the medium run production interdependencies account for the transmission of technology shocks and consumption interdependencies account for the transmission of government shocks. Technology disturbances, which are mildly correlated across countries, are more successful than government expenditure disturbances in reproducing actual data. The model also accounts for the low cross country consumption correlations observed in the data.

Keywords: Technology and government disturbances; production interdependencies; consumption interdependencies; transmission (search for similar items in EconPapers)
JEL-codes: C68 E32 F11 (search for similar items in EconPapers)
Date: 1996-11
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Persistent link: http://EconPapers.repec.org/RePEc:upf:upfgen:188

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