Type: Working Paper
Some Business Cycle Consequences of Trade Agreements: Th e Case of the North American Free Trade Agreement
Working Paper, EUI RSCAS, 2007/03
BEJAN, Maria, Some Business Cycle Consequences of Trade Agreements: Th e Case of the North American Free Trade Agreement, EUI RSCAS, 2007/03 - https://hdl.handle.net/1814/6702
Retrieved from Cadmus, EUI Research Repository
This paper investigates the effects of signing a trade agreement on the correlations of the business cycle fluctuations of consumption, investment and output between two countries. We construct an international business cycle model with trade costs and we calibrate it to the United States and Mexico in order to estimate the impact of NAFTA on their co-movements. Although there exist some discrepancies between the theory and data in the degree of correlation, the direction of change corresponds to the one in the data.
Cadmus permanent link: https://hdl.handle.net/1814/6702
Series/Number: EUI RSCAS; 2007/03