TY  - JOUR
AU  - Kraay,Aart
AU  - Ventura,Jaume
TI  - Product Prices and the OECD Cycle
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7788
PY  - 2000
Y2  - July 2000
UR  - http://www.nber.org/papers/w7788
L1  - http://www.nber.org/papers/w7788.pdf
N1  - Author contact info:
Aart Kraay
The World Bank Group
Mail Stop MC3-301
1818 H Street NW
Washington, DC 20433
Tel: 202 473-5756
Fax: 202 522-3518
E-Mail: AKraay@worldbank.org

Jaume Ventura
CREI
Universitat Pompeu Fabra
Ramon Trias Fargas, 25-27
08005-Barcelona
SPAIN
Tel: +34 93 542 1765
Fax: +34 93 542 1860
E-Mail: jventura@crei.cat
M2  - featured in NBER digest on 2000-11-01
AB  - It is well known that business cycles in OECD countries exhibit a remarkable degree of synchronization. Much less known is that the peak of the OECD cycle is associated with high prices of labour-intensive products and low prices of capital-intensive ones. We document this cyclical  behavior of product prices and argue that it offers an important clue as to why business cycles are so synchronized. Positive shocks in one or more countries raise the prices of labour-intensive products and, as a result, the demand for labour throughout the industrialized world. This generates increases in wages, employment and output in all industrial countries. Through this channel, shocks are positively transmitted across countries, creating a force towards the synchronization of business cycles.
ER  -