Sectoral Asymmetries in a Small Open Economy

S. Tolga Tiryaki ()

Working Papers from Research and Monetary Policy Department, Central Bank of the Republic of Turkey

Abstract: This paper explores the sectoral dimension of emerging market business cycles by building a two-sector small open economy real business cycle model featuring a working capital requirement, variable capital utilization and imported inputs in production. The primary finding is that the price of imported inputs and nontradable sector productivity are the two most important sources of macroeconomic fluctuations in a typical emerging market economy. Interest rates and the price of imported final goods also play significant role in driving investment and import fluctuations. The model also produces significant sectoral asymmetry, especially in response to interest rate shocks. Variable capital utilization acts as a strong propagation mechanism.

Keywords: Business cycles; Emerging markets; Imported inputs; Capital utilization (search for similar items in EconPapers)
JEL-codes: E32 F32 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-dge, nep-mac and nep-opm
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Citations: View citations in EconPapers (2)

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https://www.tcmb.gov.tr/wps/wcm/connect/EN/TCMB+EN ... g+Paperss/2014/14-33 (application/pdf)

Related works:
Journal Article: Sectoral asymmetries in a small open economy (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:tcb:wpaper:1433

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