Working Paper Series, Sveriges Riksbank (Central Bank of Sweden)
International business cycles: quantifying the effects of a world market for oil
() and Conny Olovsson
Abstract: To what extent is the international business cycle
affected by the fact that an essential input (oil) is traded on the world
market? We quantify the contribution of oil by setting up a model with
separate shocks to efficiencies of capital/labor and oil, as well as global
shocks to the oil supply. We find that the shocks to the supply and the
efficiency of oil both contribute to positive comovements. These two shocks
are also relatively transitory, which induces high responses in output and
low responses in consumption. As a consequence, the model resolves both the
consumption correlation puzzle and the international comovement puzzle.
Keywords: International comovements; business cycles; oil; productivity; (follow links to similar papers)
JEL-Codes: E32; F32; F41; Q43; (follow links to similar papers)
51 pages, May 1, 2017
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