Trade, Production Sharing, and the International Transmission of Business Cycles / Ariel Burstein, Christopher Kurz, Linda Tesar.

Format:

Book

Author/Creator:

Burstein, Ariel.

Contributor:

National Bureau of Economic Research.

Kurz, Christopher.

Tesar, Linda.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13731.

NBER working paper series no. w13731

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2008.

Summary:

Countries that are more engaged in production sharing exhibit higher bilateral manufacturing output correlations. We use data on trade flows between US multinationals and their affiliates as well as trade between the United States and Mexican maquiladoras to measure production-sharing trade and its link with the business cycle. We then develop a quantitative model of international business cycles that generates a positive link between the extent of vertically integrated production-sharing trade and internationally synchronized business cycles. A key assumption in the model is a relatively low elasticity of substitution between home and foreign inputs in the production of the vertically integrated good.

Notes:

Print version record

January 2008.