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International business cycles with complete markets

Dmitriev, Alexandre; Roberts, Ivan

Description

Kehoe and Perri (2002) show that a two-country business cycle model with endogenously incomplete markets helps to resolve the "international comovement puzzle" (. Baxter, 1995) and the "quantity anomaly" (. Backus et al., 1992, 1995). We claim that a similar performance can be achieved without resorting to market incompleteness. We show that a model with complete markets driven by productivity shocks alone can account for the "international comovement puzzle". Our model features time...[Show more]

CollectionsANU Research Publications
Date published: 2012
Type: Journal article
URI: http://hdl.handle.net/1885/71778
Source: Journal of Economic Dynamics and Control
DOI: 10.1016/j.jedc.2011.12.006

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