Interacting Business Cycle Fluctuations: A Two-Country Model

Chiarella, C; Flaschel, P; Hung, H

Interacting Business Cycle Fluctuations: A Two-Country Model

Chiarella, C Flaschel, P Hung, H

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Publisher:: World Scientific Publishing Company
Publication Type:: Journal Article
Citation:: Singapore Economic Review, 2006, 51 (3), pp. 365 - 394
Issue Date:: 2006-01

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Field	Value	Language
dc.contributor.author	Chiarella, C	en_US
dc.contributor.author	Flaschel, P	en_US
dc.contributor.author	Hung, H	en_US
dc.date.issued	2006-01	en_US
dc.identifier.citation	Singapore Economic Review, 2006, 51 (3), pp. 365 - 394	en_US
dc.identifier.issn	0217-5908	en_US
dc.identifier.uri	http://hdl.handle.net/10453/9941
dc.description.abstract	In this paper, we develop a model of business cycle fluctuations between two interacting open economies within the disequilibrium or non-market clearing paradigm. We analyze the main feedback mechanisms (Keynes, Mundell, Rose and Dornbusch) driving the dynamics and the conflict between their stabilizing and destabilizing tendencies and how these depend on certain key speeds of adjustment in the real and foreign exchange sectors. We explore numerically a variety of situations of interacting price cycles in the two countries, where the steady state is locally repelling, but where the overall dynamics are bounded in an economically meaningful domain by assuming downward money wage rigidity.	en_US
dc.publisher	World Scientific Publishing Company	en_US
dc.relation.ispartof	Singapore Economic Review	en_US
dc.subject.classification	Economics	en_US
dc.title	Interacting Business Cycle Fluctuations: A Two-Country Model	en_US
dc.type	Journal Article
utslib.citation.volume	3	en_US
utslib.citation.volume	51	en_US
utslib.for	140199 Economic Theory not elsewhere classified	en_US
utslib.for	14 Economics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
utslib.copyright.status	open_access
pubs.consider-herdc	false	en_US
pubs.issue	3	en_US
pubs.volume	51	en_US

Abstract:

In this paper, we develop a model of business cycle fluctuations between two interacting open economies within the disequilibrium or non-market clearing paradigm. We analyze the main feedback mechanisms (Keynes, Mundell, Rose and Dornbusch) driving the dynamics and the conflict between their stabilizing and destabilizing tendencies and how these depend on certain key speeds of adjustment in the real and foreign exchange sectors. We explore numerically a variety of situations of interacting price cycles in the two countries, where the steady state is locally repelling, but where the overall dynamics are bounded in an economically meaningful domain by assuming downward money wage rigidity.

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http://hdl.handle.net/10453/9941