Emerging Market Business Cycles: The Cycle is the Trend

Mark Aguiar and Gita Gopinath

Scholarly Articles from Harvard University Department of Economics

Abstract: Emerging market business cycles exhibit strongly countercyclical current accounts, consumption volatility that exceeds income volatility, and “sudden stops†in capital inflows. These features contrast with developed small open economies. Nevertheless, we show that a standard model characterizes both types of markets. Motivated by the frequent policy regime switches observed in emerging markets, our premise is that these economies are subject to substantial volatility in trend growth. Our methodology exploits the information in consumption and net exports to identify the persistence of productivity. We find that shocks to trend growth—rather than transitory fluctuations around a stable trend—are the primary source of fluctuations in emerging markets. The key features of emerging market business cycles are then shown to be consistent with this underlying income process in an otherwise standard equilibrium model.

Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (970)

Published in Journal of Political Economy -Chicago-

Downloads: (external link)
http://dash.harvard.edu/bitstream/handle/1/11988098/Gopinath_EmergingMarket.pdf (application/pdf)

Related works:
Journal Article: Emerging Market Business Cycles: The Cycle Is the Trend (2007)
Working Paper: Emerging market business cycles: the cycle is the trend (2004)
Working Paper: Emerging Market Business Cycles: The Cycle is the Trend (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:hrv:faseco:11988098

Access Statistics for this paper

More papers in Scholarly Articles from Harvard University Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Office for Scholarly Communication ().