International real business cycles

David Backus, Patrick Kehoe and Finn Kydland

No 426, Working Papers from Federal Reserve Bank of Minneapolis

Abstract: We ask whether a two-country real business cycle model can account simultaneously for domestic and international aspects of business cycles. With this question in mind, we document a number of discrepancies between theory and data. The most striking discrepancy concerns the correlations of consumption and output across countries. In the data, outputs are generally more highly correlated across countries than consumptions. In the model we see the opposite.

Date: 1987
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Published in Federal Reserve Bank of Minneapolis Staff Report 146

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Related works:
Journal Article: International Real Business Cycles (1992)
Working Paper: International real business cycles (1991)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedmwp:426

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