The Trade-Comovement Puzzle-Reference-Cited by-同舟云学术

The Trade-Comovement Puzzle

Published:2021-04-01 Issue:2 Volume:13 Page:78-120
ISSN:1945-7707
Container-title:American Economic Journal: Macroeconomics
language:en
Short-container-title:American Economic Journal: Macroeconomics

Author:

Drozd Lukasz A.¹,Kolbin Sergey²,Nosal Jaromir B.³

Affiliation:

1. Research Department, Federal Reserve Bank of Philadelphia, 10 N Independence Mall W, Philadelphia, PA 19106 (email: )

2. Amazon, 400 9th Ave N., Seattle, WA 98109 (email: )

3. Department of Economics, Boston College, 140 Commonwealth Avenue, Maloney Hall, Chestnut Hill, MA 02467 (email: )

Abstract

Standard international transmission mechanism of productivity shocks predicts a weak endogenous linkage between trade and business cycle synchronization: a problem known as the trade-comovement puzzle. We provide the foundational analysis of the puzzle, pointing to three natural candidate resolutions: (i) financial market frictions, (ii) Greenwood-Hercowitz-Huffman preferences, and (iii) dynamic trade elasticity that is low in the short run but high in the long run. We show the effects of each of these candidate resolutions analytically and evaluate them quantitatively. We find that while (i) and (ii) fall short of the data, (iii) goes a long way toward resolving the puzzle. (JEL E32, F14, F44)

Publisher

American Economic Association

Subject

General Economics, Econometrics and Finance

Link

https://pubs.aeaweb.org/doi/pdf/10.1257/mac.20170386

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1. International Comovement in the Global Production Network;Review of Economic Studies;2024-03-29

2. Business cycle synchronization and its determinants in the OECD countries: panel data evidence;Applied Economics;2023-12-03

3. The Long and Short (Run) of Trade Elasticities;American Economic Review;2023-04-01

4. Trade and business cycle synchronization: The role of common trade partners;International Economics;2022-08

5. Global trade and GDP comovement;Journal of Economic Dynamics and Control;2022-05