We study the transmission of business cycle fluctuations for developed
(N ) to developing economies (S ) with a two-country, asymmetric,
DSGE model with endogenous development of new technologies
in N, and sunk costs of exporting and transferring the production
of the intermediate goods to S. Consistent with the data, the flow of
technologies from N to S co-moves positively with output in N and S;
shocks to N have a large effect on S; business cycles in N lead over
medium term fluctuations in S; the cross-correlation of outputs is
larger than consumption; and interest rates in S are countercyclical.
Comin, Diego, Norman Loayza, Farooq Pasha, and Luis Serven.
"Medium Term Business Cycles in Developing Countries."
American Economic Journal: Macroeconomics,
General Aggregative Models: Neoclassical
Business Fluctuations; Cycles
Empirical Studies of Trade
International Investment; Long-term Capital Movements
Current Account Adjustment; Short-term Capital Movements
International Linkages to Development; Role of International Organizations
Technological Change: Choices and Consequences; Diffusion Processes