Explaining business cycles in small open economies 'How much do world prices matter?

• 成果类型: Article
• 署名作者: Kose, MA
• 署名单位: Brandeis University
• 刊物名称: JOURNAL OF INTERNATIONAL ECONOMICS
• ISSN/ISSBN: 0022-1996
• DOI: 10.1016/S0022-1996(01)00120-9
• 发表日期: 2002
• 页码: 299-327
• 关键词: business cycles; relative prices

摘要

This paper analyzes the role of world price shocks - fluctuations in the prices of capital, intermediate, and primary goods, and in the world real interest rate - in the generation and propagation of business cycles in small open developing countries. I construct a stochastic dynamic multi-sector small open economy model. The model is a variant of the specific-factors model and reflects the major structural characteristics of developing economies. I utilize variance decomposition methods to quantitatively evaluate the impact of world price shocks. The results indicate that world price shocks account for a significant fraction of business cycle variability in developing countries. (C) 2002 Elsevier Science B.V. All rights reserved.