Entry, Trade Costs and International Business Cycles

Jose Lopez and Roberto Fattal-Jaef
Additional contact information
Roberto Fattal-Jaef: UCLA

No 522, 2010 Meeting Papers from Society for Economic Dynamics

Abstract: important interaction between entry and investment, as the two can be used for consumption smoothing. Entry dampens the volatility of investment and helps the model to have a better fit for the second moments of all aggregate variables. Regarding prices, the model delivers a negative correlation between the ratio of relative consumption and the real exchange rate, reverting the so-called Backus-Smith Puzzle, but only under certain assumptions of how price indices are constructed. Given the novel results of the model, we explore the role of each intensive margin and find a strong complementarity between the two. Absent any, the model loses some of its nice features. Finally, we discuss how results vary under different financial structures. Our findings indicate that the degree of completeness in international financial markets matter for the micro dynamics of the model, even with low persistent shocks.

Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://red-files-public.s3.amazonaws.com/meetpapers/2010/paper_522.pdf (application/pdf)

Related works:
Journal Article: Entry, trade costs, and international business cycles (2014)
Working Paper: Entry, trade costs, and international business cycles (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:red:sed010:522

Access Statistics for this paper

More papers in 2010 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().