International Trade and the Business Cycle

Author/Editor:

Eswar S Prasad

Publication Date:

April 1, 1999

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper develops a new empirical framework for analyzing the dynamics of the trade balance in response to different types of macroeconomic shocks. The model provides a synthetic perspective on the conditional correlations between the business cycle and the trade balance that are generated by different shocks and attempts to reconcile these results with unconditional correlations found in the data. The results suggest that, in the post-Bretton Woods period, nominal shocks have been an important determinant of the forecast error variance for fluctuations in the trade balances of the Group of Seven countries.

Series:

Working Paper No. 1999/056

Subject:

Business cycles Economic growth Economic theory Exchange rates Foreign exchange International trade Real exchange rates Supply shocks Trade balance

English

Publication Date:

April 1, 1999

ISBN/ISSN:

9781451847680/1018-5941

Stock No:

WPIEA0561999

Pages:

25

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