Real Business Cycles in Emerging Countries?

31 Pages Posted: 20 Nov 2006 Last revised: 6 Jul 2010

See all articles by Javier Garcia Cicco

Javier Garcia Cicco

Central Bank of Chile

Roberto Pancrazi

Independent

Martín Uribe

Columbia University - Graduate School of Arts and Sciences - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: October 2006

Abstract

We use more than one century of Argentine and Mexican data to estimate the structural parameters of a small-open-economy real-business-cycle model driven by nonstationary productivity shocks. We find that the RBC model does a poor job at explaining business cycles in emerging countries. We then estimate an augmented model that incorporates shocks to the country premium and financial frictions. We find that the estimated financial-friction model provides a remarkably good account of business cycles in emerging markets and, importantly, assigns a negligible role to nonstationary productivity shocks.

Suggested Citation

Garcia Cicco, Javier and Pancrazi, Roberto and Uribe, Martin, Real Business Cycles in Emerging Countries? (October 2006). NBER Working Paper No. w12629. Available at SSRN: https://ssrn.com/abstract=938955

Javier Garcia Cicco

Central Bank of Chile

Publicaciones
Huerfanos 1185
Santiago
Chile

Roberto Pancrazi

Independent

No Address Available

Martin Uribe (Contact Author)

Columbia University - Graduate School of Arts and Sciences - Department of Economics ( email )

420 W. 118th Street
1022 International Affairs Building, MC 3308
New York, NY 10027
United States
212-851-4008 (Phone)
212-854-8059 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
81
Abstract Views
1,040
rank
299,279
PlumX Metrics