Trade in Intermediate Inputs and Business Cycle Comovement

Robert Johnson

No 18240, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Does input trade synchronize business cycles across countries? I incorporate input trade into a dynamic multi-sector model with many countries, calibrate the model to match bilateral input-output data, and estimate trade-comovement regressions in simulated data. With correlated productivity shocks, the model yields high trade- comovement correlations for goods, but near-zero correlations for services and thus low aggregate correlations. With uncorrelated shocks, input trade generates more comovement in gross output than real value added. Goods comovement is higher when (a) the aggregate trade elasticity is low, (b) inputs are more substitutable than final goods, and (c) inputs are substitutable for primary factors.

JEL-codes: F1 F4 (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
Note: IFM ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Forthcoming in The American Economic Journal: Macroeconomics

Downloads: (external link)
http://www.nber.org/papers/w18240.pdf (application/pdf)

Related works:
Journal Article: Trade in Intermediate Inputs and Business Cycle Comovement (2014)
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:nbr:nberwo:18240

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w18240

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().