When is the trend the cycle?

• 成果类型: Article
• 署名作者: Cao, Dan; L'Huillier, Jean-Paul; Yoo, Donghoon
• 署名单位: Georgetown University; Brandeis University; Korea University
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2026.106228
• 发表日期: 2026
• 关键词: real business cycles; small open economies; technology shocks; fluctuations

摘要

A literature debates the explanations for the cyclical properties of emerging markets using either trend shocks (Aguiar and Gopinath, 2007) or financial frictions (Neumeyer and Perri, 2004; Garcia-Cicco et al., 2010). We state a formal proposition that makes explicit the parametric assumptions needed for consumption to behave (exactly) as in a random-walk, permanent income model. The result is general and applies to economies with endogenous investment and production. The proposition offers a fresh perspective on the debate regarding the sources of emerging market fluctuations, and reconciles diverging findings in the literature. Moreover, we quantitatively explore the business cycle properties of the RBC model when one moves away from the parametric assumptions suggested by the proposition.