Capital Accumulation, Non-traded Goods and International Macroeconomic Dynamics with Heterogeneous Firms

Daniel Farhat ()
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Daniel Farhat: Department of Economics, University of Otago

No 1002, Working Papers from University of Otago, Department of Economics

Abstract: This paper examines international business cycle transmission within a two-country dynamic stochastic general equilibrium model featuring an endogenously determined trade pattern. In contrast to existing literature, this model distinguishes between non-traded final goods and traded inputs. The model incorporates capital into the production of final goods and shows that shocks to final goods production are important in replicating the empirical regularities of imports, exports, the real exchange rate and their relationship to GDP. Endogenously determined labour supply and high asset market frictions are incorporated into the model to improve the modelÕs ability to replicate labour market statistics and international co-movement.

Keywords: International Real Business Cycles; Non-traded Final Goods; Imperfect Competition; International Trade (search for similar items in EconPapers)
JEL-codes: F12 F21 F41 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2010-05, Revised 2010-05
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.otago.ac.nz/economics/research/otago077128.pdf First version, 2010 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:otg:wpaper:1002

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