Citation

Discussion Paper Details

Please find the details for DP7980 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Technology Shocks: Novel Implications for International Business Cycles

Author(s): Andrea Raffo

Publication Date: September 2010

Keyword(s): Backus-Smith puzzle, International business cycles and Investment-specific technology shocks

Programme Area(s): International Macroeconomics

Abstract: Understanding the joint dynamics of international prices and quantities remains a central issue in international business cycles. International relative prices appreciate when domestic consumption and output increase more than their foreign counterparts. In addition, both trade flows and trade prices display sizable volatility. This paper incorporates Hicks-neutral and investment-specific technology shocks into a standard two-country general equilibrium model with variable capacity utilization and weak wealth effects on labor supply. Investment-specific technology shocks introduce a source of fluctuations in absorption similar to taste shocks, thus reconciling theory and data. The paper also presents implications for the transmission mechanism of technology shocks across countries and for the Barro and King (1984) critique of investment shocks.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7980

Bibliographic Reference

Raffo, A. 2010. 'Technology Shocks: Novel Implications for International Business Cycles'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7980