Heckscher-Ohlin Business Cycles

IGIER Working Paper Series No. 210

33 Pages Posted: 17 Sep 2002

See all articles by Alejandro Cunat

Alejandro Cunat

London School of Economics & Political Science (LSE) - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Centre for Economic Policy Research (CEPR)

Marco Maffezzoli

Bocconi University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: March 27, 2002

Abstract

This paper introduces Heckscher-Ohlin trade features into a two-country DSGE model, and studies how productivity shocks propagate through trade in goods. In comparison with standard models, (i) transitory shocks to productivity have permanent effects on country-level aggregate variables; (ii) aggregate productivity shocks have relevant effects on the sectoral allocation of production factors; (iii) the business cycle properties of our model are broadly compatible with the empirical evidence; (iv) under complete asset markets, the international correlation of consumption is lower than that of output.

Keywords: International Trade, Heckscher-Ohlin, Business Cycles, Productivity Shocks

JEL Classification: E32, F11, F32, F41

Suggested Citation

Cunat, Alejandro and Maffezzoli, Marco, Heckscher-Ohlin Business Cycles (March 27, 2002). IGIER Working Paper Series No. 210, Available at SSRN: https://ssrn.com/abstract=319120 or http://dx.doi.org/10.2139/ssrn.319120

Alejandro Cunat

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6961 (Phone)

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Marco Maffezzoli (Contact Author)

Bocconi University - Department of Economics ( email )

Via Gobbi 5
Milan, 20136
Italy

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