This paper proposes a two-country monetary model with firm entry as a means for alleviating the comovement puzzles in international business cycle models. It shows that business formation can generate fluctuations in output, employment, investment and trade flows close to those in the data while at the same time providing positive international comovements. Simulations show that the presence of imported investment goods is essential for replicating these facts. Keywords: firm entry, international business cycle, international comovements, comovement puzzles, Taylor rule, firm markups. JEL codes: E31; E32; E52
Cavallari, L. (2013). Firms’ entry, monetary policy and the international business cycle. JOURNAL OF INTERNATIONAL ECONOMICS, 91, 263-274.
Firms’ entry, monetary policy and the international business cycle
CAVALLARI, Lilia
2013-01-01
Abstract
This paper proposes a two-country monetary model with firm entry as a means for alleviating the comovement puzzles in international business cycle models. It shows that business formation can generate fluctuations in output, employment, investment and trade flows close to those in the data while at the same time providing positive international comovements. Simulations show that the presence of imported investment goods is essential for replicating these facts. Keywords: firm entry, international business cycle, international comovements, comovement puzzles, Taylor rule, firm markups. JEL codes: E31; E32; E52I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.