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Academic Papers Artículo en revista académica

Trade in Commodities and Business Cycle Volatility

  • person David Kohn

    Fernando Leibovici; Hakon Tretvoll

  • class American Economic Journal: Macroeconomics, 13 (3): 173-208.

Abstract: This paper studies the role of differences in the patterns of production and international trade on the business cycle volatility of emerging and developed economies. We study a multi-sector small open economy in which firms produce and trade commodities and manufactures. We estimate the model to match key cross-sectional and time-series differences across countries. Emerging economies run trade surpluses in commodities and trade deficits in manufactures, while sectoral trade flows are balanced in developed economies. We find that these differences amplify the response of emerging economies to commodity price fluctuations. We show evidence consistent with this mechanism using cross-country data.

Keywords: International business cycles, output volatility, emerging economies
JEL Codes: E32, F4, F41, F44