SOURCES AND PROPAGATION OF INTERNATIONAL OUTPUT CYCLES - COMMON SHOCKS OR TRANSMISSION

This paper studies the generation and transmission of international cy cles in a multicountry model with production and consumption interdepe ndencies. Two sources of disturbance are considered and three channels of propagation are compared. Technology disturbances, which are mildl y correlated across countries, are more successful than government exp enditure disturbances in reproducing actual data. The presence of a co mmon component to the shocks and of production interdependencies appea r to be crucial in quantitatively matching the properties of the data. (C) 1998 Elsevier Science B.V. All rights reserved.