Comparative Advantage and the Cross-section of Business Cycles

No 8104, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Business cycles are both less volatile and more synchronized with the world cycle in rich countries than in poor ones. We develop two alternative explanations based on the idea that comparative advantage causes rich countries to specialize in industries that use new technologies operated by skilled workers, while poor countries specialize in industries that use traditional technologies operated by unskilled workers. Since new technologies are difficult to imitate, the industries of rich countries enjoy more market power and face more inelastic product demands than those of poor countries. Since skilled workers are less likely to exit employment as a result of changes in economic conditions, industries in rich countries face more inelastic labour supplies than those of poor countries. We show that either asymmetry in industry characteristics can generate cross-country differences in business cycles that resemble those we observe in the data.

JEL-codes: E32 F41 (search for similar items in EconPapers)
Date: 2001-01
Note: EFG IFM
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (38)

Published as Aart Kraay & Jaume Ventura, 2007. "Comparative Advantage and the Cross-section of Business Cycles," Journal of the European Economic Association, MIT Press, vol. 5(6), pages 1300-1333, December.

Downloads: (external link)
http://www.nber.org/papers/w8104.pdf (application/pdf)

Related works:
Journal Article: Comparative Advantage and the Cross-section of Business Cycles (2007)
Working Paper: Comparative Advantage and the Cross-Section of Business Cycles (2001)
Working Paper: Comparative advantage and the cross-section of business cycles (2001)
Working Paper: Comparative Advantage and the Cross-Section of Business Cycles (1998)
Working Paper: Comparative advantage and the cross-section of business cycles (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:8104

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8104

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().