The Volatility of the Tradeable and Nontradeable Sectors: Theory and Evidence

Laura Povoledo

CDMA Conference Paper Series from Centre for Dynamic Macroeconomic Analysis

Abstract: This paper investigates the business cycle fluctuations of the tradeable and nontradeable sectors of the US economy. Then, it evaluates whether a “New Open Economy” model having prices sticky in the producer’s currency can re¬produce the observed fluctuations qualitatively. The answer is positive: both in the model and in the data the standard deviations of tradeable inflation, out¬put and employment are significantly higher than the standard deviations of the corresponding nontradeable sector variables. A key role in generating this result is played by the greater responsiveness of tradeable sector variables to monetary shocks.

Keywords: New Open Economy Macroeconomics; Tradeable and Nontradeable Sectors; Business Cycles. (search for similar items in EconPapers)
JEL-codes: E32 F41 (search for similar items in EconPapers)
Date: 2009-02
New Economics Papers: this item is included in nep-cba and nep-opm
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Related works:
Working Paper: The Volatility of the Tradeable and Nontradeable Sectors: Theory and Evidence (2009)
Working Paper: The Volatility of the Tradeable and Nontradeable Sectors: Theory and Evidence (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:san:cdmacp:0901

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