Arbeitspapier
Real exchange rates and international co-movement: news-shocks and non-tradable goods with complete markets
We propose a fully flexible, complete-market model of the international business cycle that is consistent with two major empirical facts: positive cross-country co-movement of economic aggregates and a negative correlation between the real exchange rate and relative consumption (the Backus-Smith puzzle). The novelty of our paper is twofold. First, we allow for imperfect substitutability of capital which significantly reinforces Harrold-Balassa-Samuelson effects, producing more empirically relevant movements in real exchange rates. Second, we introduce changes in expectations (news-shocks) as an explanation to the Backus-Smith puzzle through movements in relative hours across countries, while being consistent with expectations-driven economic expansions.
- ISBN
-
978-92-899-2194-7
- Sprache
-
Englisch
- Erschienen in
-
Series: ECB Working Paper ; No. 1946
- Klassifikation
-
Wirtschaft
Open Economy Macroeconomics
International Business Cycles
- Thema
-
Backus-Smith Puzzle
news-driven cycles
real-exchange rates
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Lambrias, Kyriacos
- Ereignis
-
Veröffentlichung
- (wer)
-
European Central Bank (ECB)
- (wo)
-
Frankfurt a. M.
- (wann)
-
2016
- DOI
-
doi:10.2866/949206
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:42 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Lambrias, Kyriacos
- European Central Bank (ECB)
Entstanden
- 2016
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