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Relative price riddles in international business cycle theory: Are transport costs the explanation?

Mostra el registre parcial de l'element Mazzenga, Elisabetta Ravn, Morten O.
dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa 2017-07-26T10:50:03Z 2017-07-26T10:50:03Z 1998-05-01
dc.identifier.citation Journal of International Money and Finance, 23(4), 645-71, 2004
dc.description.abstract We study relative price behavior in an international business cycle model with specialization in production, in which a goods market friction is introduced through transport costs. The transport technology allows for flexible transport costs. We analyze whether this extension can account for the striking differences between theory and data as far as the moments of terms of trade and real exchange rates are concerned. We find that transport costs increase both the volatility of the terms of trade and the volatility of the real exchange rate. However, unless the transport technology is specified by a Leontief technology, transport costs do not resolve the quantitative discrepancies between theory and data. A surprising result is that transport costs may actually lower the persistence of the real exchange rate, a finding that is in contrast to much of the emphasis of the empirical literature.
dc.language.iso eng
dc.relation.ispartofseries Economics and Business Working Papers Series; 312
dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
dc.title Relative price riddles in international business cycle theory: Are transport costs the explanation?
dc.type info:eu-repo/semantics/workingPaper 2017-07-23T02:03:51Z
dc.subject.keyword international business cycles
dc.subject.keyword terms of trade
dc.subject.keyword real exchange rates
dc.subject.keyword transport costs
dc.subject.keyword Macroeconomics and International Economics
dc.rights.accessRights info:eu-repo/semantics/openAccess

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