This paper investigates the properties of an international real
business cycle model with household production. We show that a model
with disturbances to both market and household technologies reproduces
the main regularities of the data and improves existing models in
matching international consumption, investment and output correlations
without irrealistic assumptions on the structure of international
financial markets. Sensitivity analysis shows the robustness of the
results to alternative ...
This paper investigates the properties of an international real
business cycle model with household production. We show that a model
with disturbances to both market and household technologies reproduces
the main regularities of the data and improves existing models in
matching international consumption, investment and output correlations
without irrealistic assumptions on the structure of international
financial markets. Sensitivity analysis shows the robustness of the
results to alternative specifications of the stochastic processes for the
disturbances and to variations of unmeasured parameters within a
reasonable range.
+