Research Details

Abstract

This paper discusses a dynamic model that is consistent with the main empirical regularities of economic fluctuations in open economies. While other models in this class have relied on non-separable preferences or finite horizons to generate a realistic consumption volatility, we show that there is a simple class of time separable preferences that is consistent with the cyclical volatilities of the components of the national income accounts identity as well as with the countercyclical character of the balance of trade.

Type

Article

Author(s)

Isabel H Correia, Joao C. Neves, Sergio Rebelo

Date Published

1995

Citations

Correia, Isabel H, Joao C. Neves, and Sergio Rebelo. 1995. Business Cycles in a Small Open Economy. European Economic Review.(6): 1089-1113.