Business Cycles in a Small Open Economy

Isabel Correia (), Joao C Neves and Sergio Rebelo ()

No 996, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper discusses a dynamic model that is consistent with the main empirical regularities of economic fluctuations in open economies. While other models in this class have relied on non-separable preferences or finite horizons to generate a realistic consumption volatility, we show that there is a simple class of time separable preferences that is consistent with the cyclical volatilities of the components of the national income accounts identity as well as with the countercyclical character of the balance of trade.

Keywords: Business Cycles; Open Economy; Trade Balance (search for similar items in EconPapers)
JEL-codes: E32 F32 (search for similar items in EconPapers)
Date: 1994-07
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Business cycles in a small open economy (1995)
Working Paper: Business Cycles in a Small Open Economy (1994)
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