SavedAdd your journal

Journals / Central Bank Review / 2019 / Cilt: 19 - Sayı: 4

Imported inputs and the countercyclicality of net exports in emerging markets

S. Tolga TİRYAKİ
Pages
115–127
DOI
—
🏛️Bibliographic metadata and full text access for this article are provided via DergiPark.
DergiPark Record ↗
✨

AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

The model also attributes an important role to import prices in matching the business cycle facts in emerging markets.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:This paper shows that the strong countercyclicality of net exports observed in emerging market economies can be explained to a large extent by the use of imported inputs in production.
📊
Key Findings & Data:The model yields countercyclical net exports and realistic business cycle dynamics.
💡
Conclusion & Impact:The model also attributes an important role to import prices in matching the business cycle facts in emerging markets.
🔬Design:Modeling & Simulation
📍Scope:Comprehensive Sample
⚙️Variables:Domain Parameters

Özet

This paper shows that the strong countercyclicality of net exports observed in emerging market economies can be explained to a large extent by the use of imported inputs in production. We build a singlesector small open economy business cycle model featuring imported inputs and variable capital utilization in production, and a working capital constraint. The model yields countercyclical net exports and realistic business cycle dynamics. The magnitude of the countercyclicality of net exports increases with the share of imported inputs. The elasticity of substitution between domestic and imported inputs is also critical in obtaining this result. The model also attributes an important role to import prices in matching the business cycle facts in emerging markets.

🔖

Cite This Article

TİRYAKİ, S. T. (2019). Imported inputs and the countercyclicality of net exports in emerging markets. Central Bank Review, Cilt: 19 - Sayı: 4, 115–127. https://ajindex.com/articles/142182

📄 Full Text PDF Viewer

📄

PDF görüntüleyici hazırlanıyor...

References (4)

  1. Aguiar, Mark, Gopinath, Gita, February 2007. Emerging market business cycles: the cycle is the trend. J. Political Econ. 115 (1), 69e102. Backus, David K., Kehoe, Patrick J., Kydland, Finn E., March 1994. Dynamics of the trade balance and the terms of trade: the J-curve? Am. Econ. Rev. 84 (1), 84e103. Backus, David K., Kehoe, Patrick J., Kydland, Finn E., 1995. International business cycles: theory and evidence. In: Cooley, Thomas F. (Ed.), Frontiers of Business Cycle Research. Princeton University Press,
  2. Princeton, NJ, pp. 331e356 (Chapter 11). Boileau, Martin, Normandin, Michel, January 2008. Dynamics of the current account and interest differentials. J. Int. Econ. 74 (1), 35e52. Correia, Isabel, Neves, Jo~ ao C., Rebelo, Sergio, June 1995. Business Cycles in a Small Open Economy. European Economic Review, pp. 1089e1113, 39 (6). De Backer, Koen, Yamano, Norihiko, 2007. The measurement of globalisation using international input-output tables. OECD, STI Working Paper DSTI/DOC 8. April 2008.
  3. Garcia-Cicco, Javier, 2008. What Drives the Roller Coaster? Sources of Fluctuations in Emerging Countries. Duke University, January. Garcia-Cicco, Javier, Pancrazi, Roberto, Uribe, Martin, October 2006. “Real Business Cycles in Emerging Economies?” NBER Working Paper No. 12629 revised October 2007.
  4. Gertler, Mark, Gilchrist, Simon, Fabio, M. Natalucci, March-April 2007. External constraints on monetary policy and the financial accelerator. J. Money Credit Bank. 39 (2e3), 295e330. Greenwood, Jeremy, Hercowitz, Zvi, Huffman, Gregory W., June 1988. Investment, capacity utilization, and the real business cycle. Am. Econ. Rev. 78 (3), 402e417. Kehoe, Timothy J., Kim, J. Ruhl, July 2009. Sudden stops, sectoral reallocations, and the real exchange rate. J. Dev. Econ. 89 (2), 235e249. New Approaches to Financial Globalization. King, Robert G., Rebelo, Sergio T., 1999. Resuscitating real business cycles. In: Taylor, John B., Woodford, Michael (Eds.), Handbook of Macroeconomics, vol. 1, pp. 927e1007. Part 2, (Chapter 14). Kose, M. Ayhan, March 2002. Explaining business cycles in small open economies: € ‘How much do world prices matter? J. Int. Econ. 56 (2), 299e327. Lane, Philip R., Gian Maria Milesi-Ferretti, April 2006. The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities, 1970-2004.” CEPR Working Paper No. 5644. Letendre, Marc-Andre, August 2004. Capital utilization and habit formation in a small open economy model. Can. J. E