Trade, production sharing, and the international transmission of business cycles

Ariel Burstein, Christopher Kurz and Linda Tesar ()

Journal of Monetary Economics, 2008, vol. 55, issue 4, 775-795

Abstract: Countries that are more engaged in production sharing exhibit higher bilateral manufacturing output correlations. We use data on trade flows between US multinationals and their affiliates as well as trade between the United States and Mexican maquiladoras to measure production-sharing trade and its link with the business cycle. We then develop a quantitative model of international business cycles that generates a positive link between the extent of vertically integrated production-sharing trade and internationally synchronized business cycles. A key assumption in the model is a relatively low elasticity of substitution between home and foreign inputs in the production of the vertically integrated good.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (192)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304-3932(08)00039-1
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Trade, Production Sharing, and the International Transmission of Business Cycles (2008)
Working Paper: Trade, Production Sharing and the International Transmission of Business Cycles (2005)
Working Paper: Trade, Production Sharing and the International Transmission of Business Cycles (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:55:y:2008:i:4:p:775-795

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().