Abstract:
In this paper, we (1) document new facts about the behavior of capital and labor-intensive goods over the business cycle; (2) illustrate a mechanism that generates international investment comovement through shifting compositional changes of production and trade across sectors. Quantitative predictions of our model can match aggregate and sectoral statistics and generate empirically plausible sectoral compositional effects. We also show that essential segments of the transmission process receive empirical support.
Host: Kjetil Storesletten