Medium term business cycles in developing countries
By: Diego Comin, Norman Loayza, Farooq Pasha, Luis Serven
Contributors: Harvard Business School
Edition: Rev.
Series: Working paper / Harvard Business School -- 10-029; Working paper (Harvard Business School) -- 10-029.
Publisher: Harvard Business School
Published: 2009
Place of publication: [Boston]
Language: eng
Number of pages: 37
Description: We build a two country asymmetric DSGE model with two features: (i) endogenous and slow diffusion of technologies from the developed to the developing country, and (ii) adjustment costs to investment flows. We calibrate the model to match the Mexico-U.S. trade and FDI flows. The model is able to explain the following stylized facts: (i) U.S. and Mexican output co-move more than consumption; (ii) U.S. shocks have a larger effect on Mexico than in the U.S.; (iii) U.S. business cycles lead over medium term fluctuations in Mexico; (iv) Mexican consumption is more volatile than output.
Notes: "October 2009, September 2010"--Publisher's website.

Includes bibliographical references.