Data and Replication Code for 'The Trade-Comovement Puzzle', by Drozd, Kolbin, Nosal.
Principal Investigator(s): View help for Principal Investigator(s) Lukasz Drozd, Federal Reserve Bank of Philadelphia; Sergey Kolbin, Amazon Corporation; Jaromir Nosal, Boston College
Version: View help for Version V1
| Name | File Type | Size | Last Modified |
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| Dynare-replication-files | 02/17/2020 05:17:PM | ||
| Mathematica-notebooks | 02/17/2020 05:18:PM | ||
| Stata replications | 02/17/2020 05:19:PM | ||
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application/pdf | 86.6 KB | 02/17/2020 12:11:PM |
Project Citation:
Drozd, Lukasz, Kolbin, Sergey, and Nosal, Jaromir. Data and Replication Code for “The Trade-Comovement Puzzle”, by Drozd, Kolbin, Nosal. Nashville, TN: American Economic Association [publisher], 2021. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2021-03-19. https://doi.org/10.3886/E116889V1
Project Description
Summary:
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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, which points to three natural candidate resolutions: i) financial market frictions; ii) Green- wood–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.
Scope of Project
JEL Classification:
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E32 Business Fluctuations; Cycles
F32 Current Account Adjustment; Short-term Capital Movements
F41 Open Economy Macroeconomics
F44 International Business Cycles
E32 Business Fluctuations; Cycles
F32 Current Account Adjustment; Short-term Capital Movements
F41 Open Economy Macroeconomics
F44 International Business Cycles
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