Understanding the persistence properties of international macroeconomic aggregates

In this paper the ability of a two-country model of growth and cycles is ev aluated to explain the persistence properties of output and consumption acr oss countries. Simulated output and consumption levels replicate the observ ed appearance of non-cointegration across countries. Simulated output growt h rates, however, do not explain the observed positive serial correlation o f output growth rates. The reallocation of resources in response to technol ogy shocks generates a negative serial correlation for output growth rates. JEL Classification: F41, F43.