Incomplete asset markets and the cross-country consumption correlation puzzle

Article Abstract:

An International Real Business Cycle (IRBC) model in which asset markets are incomplete because only debt contracts can be traded in international financial markets, is found to produce cross-country consumption correlations which are significantly lower compared to extremely high correlations obtained when IRBC models assume complete international asset markets. This improvement is attained without substantially worsening forecasts for other key business cycle statistics.

Models, Financial markets, International financial institutions

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Explaining international comovements of output and asset returns: The role of money and nominal rigidities

Article Abstract:

This paper presents a stochastic general equilibrium model of a two-country economies with sticky nominal prices and wages whose returns on output and asset returns are higher than when prices and wages are flexible.

France, Statistical Data Included, Evaluation, Stochastic analysis, Prices, Wages, Wages and salaries, Value (Economics)

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Is Schumpeterian 'creative destruction' a plausible source of endogenous real business cycle shocks?

Article Abstract:

A study is conducted using standard real business cycle model to examine the relationship between Schumpeterian growth and business cycles.

Science & research, Economics, Economic methods

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