Some Business Cycles Consequences of Signing Trade Agreements: The Case of NAFTA

Maria Bejan

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the effects of signing a trade agreement on the correlations of the business cycle fluctuations of consumption, investment and output between two countries. We construct an international business cycle model with trade costs and we calibrate it to the United States and Mexico in order to estimate the impact of NAFTA on their co-movements. Although there exist some discrepancies between the theory and data in the degree of correlation, the direction of change corresponds to the one in the data.

Keywords: International Business Cycles; Trade Agreements; International Co-movements (search for similar items in EconPapers)
JEL-codes: E32 F11 F15 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-int and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:2807

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