INTERNATIONAL-BUSINESS CYCLES IN THEORY AND IN PRACTICE

This paper investigates whether multi-country international business m odels can account for international comovements. In the OECD there are substantial positive comovements between many output components, betw een levels of employment, and between total factor productivities. The standard international business cycle model is not consistent with th ese comovements. Except for consumption levels, the model implies eith er negative or very low comovements. This is a robust feature of the t heoretical models independently of specific parameter values. One, int eresting finding is that a more general specification of the technolog y shock processes lead to substantial comovements but at the cost of a nother deficiency. (C) 1997 Elsevier Science Ltd.