 Finance and SynchronizationAmbrogio Cesa-Bianchi, Jean Imbs and Jumana Saleheen PSE-Ecole d'économie de Paris (Postprint) from HAL Abstract: In the workhorse model of international real business cycles, financial integration exacerbates the cycle asymmetry created by country-specific supply shocks. The prediction is identical in response to purely common shocks in the same model augmented with simple country heterogeneity (e.g., where depreciation rates or factor shares are different across countries). This happens because common shocks have heterogeneous consequences on the marginal products of capital across countries, which triggers international investment. In the data, filtering out common shocks requires therefore allowing for country-specific loadings. We show that finance and synchronization correlate negatively in response to such common shocks, consistent with previous findings. But finance and synchronization correlate non-negatively, almost always positively, in response to purely country-specific shocks. Date: 2019-01 Published in Journal of International Economics, 2019, 116, pp.74-87. ⟨10.1016/j.jinteco.2018.08.007⟩ There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-01884379 DOI: 10.1016/j.jinteco.2018.08.007 Access Statistics for this paper More papers in PSE-Ecole d'économie de Paris (Postprint) from HAL |
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