English, Article, Journal or magazine article edition: Net Exports, Consumption Volatility and International Real Business Cycle Models Andrea Raffo

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Bookmark: http://trove.nla.gov.au/version/30658
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Net exports, consumption volatility, and international real business cycle models
Author
  • Andrea Raffo
Physical Description
  • preprint
Notes
  • Conventional two-country RBC models interpret countercyclical net exports as reflecting, in large part, the dynamics of capital. I show that, quantitatively, theoretical economies rely on counterfactual terms of trade effects: trade fluctuations, on the contrary, are driven primarily by consumption smoothing, thus generating procyclical net trade in goods. I then consider a class of preferences that embeds home production in a reduced form: consumption volatility increases so that countercyclical net exports reflect primarily a strong relation between import of goods and income, as in the data. The major discrepancy between theory and data concerns the variability of international prices.
  • Net exports; Home production; Consumption volatility.
  • RePEc:red:sed006:128
  • Conventional two-country RBC models interpret countercyclical net exports as reflecting, in large part, the dynamics of capital. I show that, quantitatively, theoretical economies rely on counterfactual terms of trade effects: trade fluctuations, on the contrary, are driven primarily by consumption smoothing, thus generating procyclical net trade in goods. I then consider a class of preferences that embeds home production in a reduced form: consumption volatility increases so that countercyclical net exports reflect primarily a strong relation between income and imports, as in the data. The major discrepancy between theory and data concerns the variability of international prices.
  • Business cycles ; Exports
  • RePEc:fip:fedkrw:rwp06-01
Language
  • English
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