The goal of this dissertation is to improve our understanding of the driving forces behind short-term movements in important aggregate variables such as exports, imports, the trade balance, output, investment, and employment. The first chapter contrasts the cyclical behavior of the trade balance and trade flows in a group of emerging and a group of developed economies. I find that: (i) unlike developed open economies, emerging economies import a substantial part of their equipment and export few or only a selective set of capital goods, (ii) capital good imports display large procyclical business cycle swings, and (iii) unlike developed countries, exports are acyclical in emerging economies. Previous work has shown that emerging economy business cycles are also characterized by strongly countercyclical trade balances, countercyclical real interest rates, and real interest rates that are negatively correlated with future output. I present a small open economy business cycle model that is consistent with these empirical regularities. The key model feature is a two-sector set-up that incorporates the stylized facts that emerging economies import capital goods and exports are acyclical.The authors argue this is in sharp contrast with developed economies where the income process is primarily driven by transitory shocks. ... Garcia-Cicco, Pancrazi , and Uribe (2006) estimate the stochastic process of the unit root and transitory shocks over a longer sample period. ... The paper is organized as follows. Sectionanbsp;...
|Title||:||Essays in Macroeconomics|
|Publisher||:||ProQuest - 2008|