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The cost of adjustment: On comovement between the trade balance and the terms of trade
Citation
Dmitriev, A and Roberts, I, The cost of adjustment: On comovement between the trade balance and the terms of trade, Economic Modelling, 35, (5) pp. 689-700. ISSN 0264-9993 (2013) [Refereed Article]
Copyright Statement
Copyright 2013 Elsevier B.V.
DOI: doi:10.1016/j.econmod.2013.08.027
Abstract
The S-shaped cross-correlation function between the trade balance and the terms of trade has been documented for several countries and time frames. The ability of two-country, two-good business cycle models to reproduce this regularity hinges on the dynamics of capital formation. We cosider the consequences of modeling the adjustment costs for comovement in the trade balance and the terms of trade. Both complete and incomplete market models with capital adjustment costs a la Hayashi (1982) deliver the S-curve seen in the data while the model with investment adjustment costs a la Christiano et al, (2005) does not.
Item Details
| Item Type: | Refereed Article |
|---|---|
| Keywords: | capital adjustment costs, investment adjustment costs, S-curve, international business cycles |
| Research Division: | Economics |
| Research Group: | Applied Economics |
| Research Field: | Macroeconomics (incl. Monetary and Fiscal Theory) |
| Objective Division: | Economic Framework |
| Objective Group: | Macroeconomics |
| Objective Field: | Monetary Policy |
| UTAS Author: | Dmitriev, A (Dr Alexandre Dmitriev) |
| ID Code: | 87606 |
| Year Published: | 2013 |
| Web of Science® Times Cited: | 2 |
| Deposited By: | Economics and Finance |
| Deposited On: | 2013-11-26 |
| Last Modified: | 2017-01-11 |
| Downloads: | 106 View Download Statistics |
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