NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade, Production Sharing, and the International Transmission of Business Cycles

Ariel Burstein, Christopher Kurz, Linda Tesar

NBER Working Paper No. 13731
Issued in January 2008
NBER Program(s):   IFM   ITI   EFG

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.

download in pdf format
   (487 K)

email paper

This paper is available as PDF (487 K) or via email.

This paper was revised on December 5, 2011

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w13731

Published: Burstein, Ariel & Kurz, Christopher & Tesar, Linda, 2008. "Trade, production sharing, and the international transmission of business cycles," Journal of Monetary Economics, Elsevier, vol. 55(4), pages 775-795, May.

Users who downloaded this paper also downloaded these:
Baxter w5025 International Trade and Business Cycles
Khandelwal w15178 The Long and Short (of) Quality Ladders
Kyle and McGahan w15468 Investments in Pharmaceuticals Before and After TRIPS
Johnson w18240 Trade in Intermediate Inputs and Business Cycle Comovement
Crucini, Kose, and Otrok w14380 What Are the Driving Forces of International Business Cycles?
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us