Organizational Capital and the International Co-movement of Investment

Alok Johri, Marc-Andre Letendre and Daqing Luo

Department of Economics Working Papers from McMaster University

Abstract: A productivity shock leads to a large international transfer of capital and negative co-movement of investment in the typical two-country real business cycle model. Most recent models that attempt to reduce or remove this transfer produce unrealistically low investment volatility. We show that adding organizational capital to the technological environment of a relatively standard international business cycle model can ameliorate this problem. In addition we show that GHH preferences along with the above modification are sufficient to deliver positive cross-country correlations of consumption, hours, output and investment.

Keywords: International RBC; learning by doing; organizational capital; cross-country correlations; investment (search for similar items in EconPapers)
JEL-codes: E32 F21 F41 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2010-05
New Economics Papers: this item is included in nep-bec, nep-dge and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Organizational capital and the international co-movement of investment (2011)
Working Paper: Organizational Capital and the International Co-movement of Investment (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2010-05

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