Abstract
We estimate a dynamic two-country model in which economic fluctuations are driven by a worldwide supply shock, country-specific supply shocks, and relative fiscal, money, and preference shocks. Identification is achieved using only long-run restrictions, based on a theoretical model. The main results, are: supply shocks, particularly country-specific ones, are very important in generating international business cycles, although the post-1973 flexible-exchange-rate period has been inherently more volatile, there are no differences in transmission properties of economic disturbances across exchange-rate regimes for the endogenous variables we focus on. -Authors
| Original language | English (US) |
|---|---|
| Pages (from-to) | 335-359 |
| Number of pages | 25 |
| Journal | American Economic Review |
| Volume | 83 |
| Issue number | 3 |
| State | Published - 1993 |
All Science Journal Classification (ASJC) codes
- Economics and Econometrics