Journal of Political Economy · 1992 · 1.7K citations · 20 references
Social SciencesBusiness EconomicsEconomicsEconometricsInternational EconomicsMacroeconomicsBusiness CyclesGlobal ConsumptionInternational MacroeconomicsModel SpecificationBusiness Cycle DynamicsBusiness Cycle LinkagesConsumption Correlation Across CountriesInternational Business CyclesReal Business Cycle ModelsReal Business Cycle Theory
The study investigates whether a two‑country real business cycle model can simultaneously explain domestic and international business‑cycle dynamics. The authors identify several discrepancies between the model’s predictions and empirical data. The model predicts higher cross‑country consumption correlation than output, whereas the data show the opposite, with output more correlated across countries.
We ask whether a two-country real business cycle model can account simultaneously for domestic and international aspects of business cycles. With this question in mind, we document a number of discrepancies between theory and data. The most striking discrepancy concerns the correlations of consumption and output across countries. In the data, outputs are generally more highly correlated across countries than consumptions. In the model we see the opposite.
20
Time to Build and Aggregate Fluctuations
Finn E. Kydland, Edward C. Prescott · Econometrica · 1982 · 5.9K citations
Domestic Saving and International Capital Flows
Martin Feldstein, Charles Yuji Horioka · The Economic Journal · 1980 · 2.8K citations
Indivisible labor and the business cycle
Gary D. Hansen · Journal of Monetary Economics · 1985 · 2K citations · Full text