Abstract
This dissertation studies different aspects of the transmission of international business cycles across countries. It consists of three chapters.
In the first chapter, we study the role of trade in consumer durable goods and capital goods in the context of a two-country New Keynesian (NK) dynamic stochastic general equilibrium (DSGE) model. Our benchmark model, calibrated for the U.S. and its trading partners, is able to account for the high volatility and positive correlation of exports and imports observed in the data and discussed in the literature (Engel and Wang, 2011; Erceg, Guerrieri, and Gust, 2008).
Moreover, it can also match the conventional interest rate channel that is a centerpiece of the NK framework. We compare our baseline model with alternative two-country NK models with and without consumer durable goods and capital goods.