2009/12/01 by Costas Arkolakis, Ananth Ramanarayanan · 1 citation
Economics, Econometrics and Finance · #Economic Policies and Impacts #Global Financial Crisis and Policies #Monetary Policy and Economic Impact
paper · doi:10.1111/j.1467-9442.2009.01580.x
openalex publication_date 2009/12/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/01
Abstract We explore the impact of vertical specialization—trade in goods across multiple stages of production—on the relationship between trade and business cycle synchronization across countries. We develop an international business cycle model in which the degree of vertical specialization varies with trade barriers. With perfect competition, we show analytically that fluctuations in measured total factor productivity are not linked across countries through trade. In numerical simulations, we find little dependence of business cycle synchronization on trade intensity. An extension of the model to allow for imperfect competition has the potential to resolve these shortcomings.