Output falls and the international transmission of crises

Pedro Brinca and Costa-Filho João
Authors registered in the RePEc Author Service: João Ricardo Mendes Gonçalves Costa Filho

MPRA Paper from University Library of Munich, Germany

Abstract: Economic crises are usually transmitted across countries via either price or quantity shocks on the balance of payments. This paper complements the literature on international trade and business cycles by analyzing the role of imported intermediates goods inputs during the Great Financial Crisis in small open economies. We find that in an increasingly integrated world, intra-industry international trade is an important channel of propagation of shocks. A depreciation of the real exchange rate rises to costs of intermediate output, which decreases production. Our quantitative model is able to reproduce both the intensity and the velocity of the crisis in Mexico.

Keywords: Great Recession; Intermediate goods; Business Cycle Accounting (search for similar items in EconPapers)
JEL-codes: E27 E30 E32 E37 (search for similar items in EconPapers)
Date: 2021-04-20
New Economics Papers: this item is included in nep-dge, nep-int, nep-mac and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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