Understanding Business Cycles in Open Economies PDF Download

Author: Mustakiym Ayhan Kose
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 336

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Author: Thuy Lan Nguyen
Publisher:
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Category :
Languages : en
Pages :

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Although news shocks are important in explaining the 1980 recession and the 1993-94 boom, they do not explain much of other business cycles in our sample. Moreover, the contribution of news shocks to explaining short run fluctuations is negligible. These results arise because data on expectations show that changes in expectations are not large and do not resemble actual movements of output. Therefore, news shocks cannot be the main driver of business cycles. Chapters Two and Three focus on the driving forces of business cycles in open economies. We start Chapter Two with an observation that business cycles are strongly correlated across countries. We document that this pattern is also true for small open economies between 1900 and 2006 using a novel data set for 17 small developed and developing countries. Furthermore, we provide a new evidence about the role of common shocks in business cycles for small open economies in a structural estimation of a real small open economy model featuring a realistic debt adjustment cost and common shocks.

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Languages : en
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This dissertation consists of three chapters about business cycles in open economies. The first chapter addresses the question of why housing investment is so volatile, especially in economies with developed mortgage markets. To this end, the chapter develops an augmented Real Business Cycle model with a housing collateral constraint. The collateral constraint creates a link between the housing market and borrowing capacity, a link that amplifies the response of housing demand to shocks and becomes stronger in economies with deeper mortgage markets. The second chapter examines an anomaly between international business cycle models and empirical evidence in cross-country employment correlation. It shows that the wealth effect on leisure plays a determining role in generating a negative employment comovement in the models, hence proposing a solution to the anomaly. The last chapter compares macroeconomic consequences of dollarized emerging countries under two alternative monetary policies: the inflation targeting rule and the fixed exchange rate regime. It shows that the floating exchange rate regime can be dominated by the fixed exchange rate regime in the role of cushioning shocks and in welfare terms.

Author: Tao Peng
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 206

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Author: Víctor Alberto Pacharoni
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ISBN:
Category : Business cycles
Languages : en
Pages : 190

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Author: Eurilton Alves Araujo
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Category :
Languages : en
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Author: Philip A. Klein
Publisher: Routledge
ISBN: 131549227X
Category : Business & Economics
Languages : en
Pages : 253

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This "Festschrift" honours Geoffrey H. Moore's life-long contribution to the study of business cycles. After some analysts had concluded that business cycles were dead, renewed economic turbulence in the 1970s and 1980s brought new life to the subject. The study of business cycles now encompasses the global economic system, and this work aims to push back the frontiers of knowledge.

Author: Ali Mohammad Al-Nadi
Publisher:
ISBN:
Category :
Languages : en
Pages : 152

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In this dissertation we use Dynamic Stochastic General Equilibrium (DSGE) models to explain empirical regularities and policy implications related to (1) durable goods, interest rates and small open economy business cycles, (2) Terms-of-Trade (ToT) and economic fluctuations in small open economies and (3) Budget Stabilization Funds (BSFs) and States' business cycles. In the first essay, we document that durable spending in developed small open economies constitutes a large share of their total income. Their spending is highly procyclical, sensitive to interest rates, and leads the business cycle. We address these regularities with a RBC model with durable goods. The model successfully replicates the observed business cycle regularities and explains many anomalies not explained in the existing literature. It also emphasizes the role of interest rates uncertainty in explaining the dynamics of the small open economies. The second essay addresses the impacts of the ToT fluctuation on the business cycles of various small open economies. We argue that differences in the degree of durability in domestic production and imports may make these economies more or less sensitive to an identical ToT shock. We found that economies with higher durability usually enjoy more stable business cycle comparing with economies with lower degree of durability. Differences in the persistence of the ToT do affect the dynamic of the external accounts but it cannot explain the observed differences business cycles across small open economies. In the last essay, we evaluate the economic impacts of the Budget Stabilization Funds (BSF) on State-level business cycles. We lay out a State economy RBC model in which a State's government applies a designated saving rule consistent with households' optimization. Given the suggested rule we find that the BDFs become a significant automatic stabilizer. It is not only mitigates the procyclicality of the government spending but it also smooth the State's business cycle.

Author: Kihyun Park
Publisher:
ISBN:
Category :
Languages : en
Pages : 147

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This dissertation studies the dynamic effects of various economic shocks in a two-sector small open economy. It is divided into three essays. Essays 1 and 2 have a theoretical focus; they involve the developing of intertemporal optimizing models of a small open economy. In these essays, we use the representative-agent framework to derive dynamic macroeconomic effects. Specifically, in the first essay we examine the effects of monetary policy targeted at an inflation rate in a small open economy. We adopt a two-sector dependent economy where money is introduced through various cash-in-advance (CIA) constraints. Results are very significant and sensitive to various CIA constraints as well as relative capital intensities. Higher inflation will generate more investment in the economy leading to a higher level of capital stock and a lower level of net foreign assets in the long-run when the nontraded sector is more capital intensive and households need cash for purchasing tradable goods. However, the long-run effects are completely opposite if households need real balances for purchasing nontradable goods instead. In the second essay we examine the effects and the associated dynamics of an increase in international oil prices and domestic inflation. We show that an increase in oil prices or higher domestic inflation lowers the level of investment, production, and consumption in the long-run. The economy experiences a current account surplus along with a fall in capital stock by holding more foreign traded bonds. Transitional dynamics significantly depend on sectoral capital intensity as well. In essay 3 we investigate the explanatory power of yield spread in predicting economic activities in developing economies. We employ both the Markov regime switching model (MS) and the probit model to estimate the probability of recessions during the Asian financial crisis. We find that three-regime MS model is better predictor of recessions than tworegime MS model. The MS results are also compared with that of the standard probit model for comparison. The MS model does not significantly improve the forecasting ability of the yield spread in forecasting business cycles.

Author: Seongman Moon
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 394

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