NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Trade in Intermediate Inputs and Business Cycle Comovement

Robert C. Johnson

NBER Working Paper No. 18240
Issued in July 2012
NBER Program(s):   IFM   ITI

Does input trade synchronize business cycles across countries? I incorporate input trade into a dynamic multi-sector model with many countries, calibrate the model to match bilateral input-output data, and estimate trade-comovement regressions in simulated data. With correlated productivity shocks, the model yields high trade- comovement correlations for goods, but near-zero correlations for services and thus low aggregate correlations. With uncorrelated shocks, input trade generates more comovement in gross output than real value added. Goods comovement is higher when (a) the aggregate trade elasticity is low, (b) inputs are more substitutable than final goods, and (c) inputs are substitutable for primary factors.

You may purchase this paper on-line in .pdf format from SSRN.com ($5) for electronic delivery.

Information about Free Papers

You should expect a free download if you are a subscriber, a corporate associate of the NBER, a journalist, an employee of the U.S. federal government with a ".GOV" domain name, or a resident of nearly any developing country or transition economy.

If you usually get free papers at work/university but do not at home, you can either connect to your work VPN or proxy (if any) or elect to have a link to the paper emailed to your work email address below. The email address must be connected to a subscribing college, university, or other subscribing institution. Gmail and other free email addresses will not have access.

E-mail:

An online appendix is available for this publication.

This paper was revised on June 8, 2014

Acknowledgments

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w18240

forthcoming in The American Economic Journal: Macroeconomics

Users who downloaded this paper also downloaded these:
Ortega and Peri w18193 The Effect of Trade and Migration on Income
Johnson and Noguera w18186 Fragmentation and Trade in Value Added over Four Decades
Bems and Johnson w18498 Value-Added Exchange Rates
Alessandria, Kaboski, and Midrigan w18191 Trade Wedges, Inventories, and International Business Cycles
Feng, Li, and Swenson w18260 The Connection between Imported Intermediate Inputs and Exports: Evidence from Chinese Firms
 
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