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• W316508709 abstract "In this paper we investigate the e¤ects of signing a trade agreement on the correlations between the business cycle ‡uctuations of consumption and investment of two countries. To do so, we construct an international business cycle model with trade costs and we calibrate it for the case of NAFTA. Although there exists a small discrepancy between the theory and data in the degree of correlation, the direction of change corresponds to the one in the data. We also show that calibrating this model for the case of NAFTA produces higher correlation in output than in consumption. Therefore the ”international comovements puzzle” does not appear in our results. I would like to thank Timothy Kehoe for many discussions and suggestions. I am grateful to Klaus Desmet for advising and encouraging me. I also wish to thank Camelia Bejan, Michele Boldrin, Beatriz de Blas, Juan Jose Dolado, Thomas Eife, Javier Diaz-Gimenez, Marco Ma¤ezzoli, Felipe Meza, Juan Gabriel Rodriguez, Ramon Xifre as well as macroeconomics-workshop participants at the University Carlos III de Madrid and seminar participants at The Summer Meeting of Economic Analysis(Vigo) and XXVIII SAE (Seville) for useful comments. All remaining errors are mine. I wish to thank the Economics Departments at Bocconi University and University of Minnesota for their hospitality while part of this research was conducted. Financial support from European Commission’s Marie Curie Fellowship Program and Fundacion Carlos III is gratefully acknowledged. yRobert Schuman Centre for Advanced Studies, European University Institute, Villa La Fonte, Via delle Fontanelle, 20, I 50016 San Domenico di Fiesole (FI), Italy, Email: Maria.Bejan@IUE.it, Tel (o¢ ce): (+39) 055 4685 802, Mobile: (+39) 34" @default.
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• W316508709 date "2004-01-01" @default.
• W316508709 modified "2023-10-17" @default.
• W316508709 title "Some Business Cycle Consequences of Trade Agreements: Case of North American Free Trade Agreement (NAFTA)" @default.
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