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
BKK3C_fg2nf			02/17/2020 05:17:PM
.DS_Store	application/octet-stream	6 KB	02/17/2020 12:12:PM
BKK3C.log	text/x-log	1.2 KB	02/17/2020 12:12:PM
BKK3C2.log	text/x-log	1.2 KB	02/17/2020 12:12:PM
BKK3C_fg.log	text/x-log	1.1 KB	02/17/2020 12:12:PM
BKK3C_fg2.log	text/x-log	1.2 KB	02/17/2020 12:12:PM
BKK3C_fg2nf.log	text/x-log	1.2 KB	02/17/2020 12:12:PM
BKK3C_fg2nf.m	text/x-matlab	24.4 KB	02/17/2020 12:12:PM
BKK3C_fg2nf.mod	text/plain	17.2 KB	02/17/2020 12:12:PM
BKK3C_fg2nf_dynamic.m	text/x-matlab	34.6 KB	02/17/2020 12:12:PM

Project Description

Summary:

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:
      E32 Business Fluctuations; Cycles
      F32 Current Account Adjustment; Short-term Capital Movements
      F41 Open Economy Macroeconomics
      F44 International Business Cycles

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Published Versions

V1 [2021-03-19]

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