Contributions

  • Harvard Business School - Contributor

Publication

2009 - Harvard Business School, Boston, Massachusetts

Language

English

Word Count

9,750 words, Guess

Page Count

39 pages

Identifiers

Description

We build a two country asymmetric DSGE model with two features: (i) a product cycle structure determines the range of intermediate goods used to produce new capital in each country and (ii) there are investment flow adjustment costs in the developing economy. We calibrate the model to match the Mexico-US trade and FDI flows. The model is able to explain (i) why US shocks have a larger effect on Mexico than in the US and hence why the Mexican economy is more volatile than the US; (ii) why US business cycles lead over medium term fluctuations in Mexico and (iii) why Mexican consumption is not less volatile than output.

Subjects

Series Statement

  • Working paper / Harvard Business School -- 10-029

Other Editions

  • Medium term business cycles in developing countriesHarvard Business School2009

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