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Article
Firms' entry, monetary policy and the international business cycle
Journal of International Economics (2013)
  • Lilia Cavallari, University of Rome III
Abstract
This paper proposes a two-country monetary model with firm entry as a means for alleviating the comovement puzzles in international business cycle models. It shows that business formation can generate fluctuations in output, employment, investment and trade flows close to those in the data while at the same time providing positive international comovements. Simulations show that the presence of imported investment goods is essential for replicating these facts. Keywords: firm entry, international business cycle, international comovements, comovement puzzles, Taylor rule, firm markups. JEL codes: E31; E32; E52
Keywords
  • product variety,
  • firm entry,
  • international business cycle,
  • monetary policy,
  • interest rate rules,
  • exchange rate regimes
Publication Date
2013
Citation Information
Lilia Cavallari. "Firms' entry, monetary policy and the international business cycle" Journal of International Economics, vol.91, 263-274, 2013