Real Business Cycles in Emerging Countries?
- (pp. 2510-31)
Abstract
We use more than a century of Argentine and Mexican data to estimate the structural parameters of a small-open-economy real-business-cycle model driven by nonstationary productivity shocks. We find that the RBC model does a poor job of explaining business cycles in emerging countries. We then estimate an augmented model that incorporates shocks to the country premium and financial frictions. We find that the estimated financial-friction model provides a remarkably good account of business cycles in emerging markets and, importantly, assigns a negligible role to nonstationary productivity shocks. (JEL E13, E32, E44, F43, O11, O16)Citation
García-Cicco, Javier, Roberto Pancrazi, and Martín Uribe. 2010. "Real Business Cycles in Emerging Countries?" American Economic Review, 100 (5): 2510-31. DOI: 10.1257/aer.100.5.2510Additional Materials
JEL Classification
- E13 General Aggregative Models: Neoclassical
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy
- F43 Economic Growth of Open Economies
- O11 Macroeconomic Analyses of Economic Development
- O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance