Backus-Smith puzzle

Technology Shocks: Novel Implications for International Business Cycles

JEL codes: 
E32, F32, F41
Version Date: 
Aug 2010

Understanding the joint dynamics of international prices and quantities remains a central issue in international business cycles. International relative prices appreciate when domestic consumption and output increase more than their foreign counterparts. In addition, both trade flows and trade prices display sizable volatility.

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