Author(s)
Abstract
In this letter, we demonstrate that the recent claim that productivity news shocks produce effects on trade and capital flows that are not in like with a standard Backus–Kehoe–Kydland model, are unique to the US and cannot be generalized. In a large set of developed countries, we show the BKK predictions to hold in both a stationary framework and using local projections to estimate impulse responses up to a 10 year horizon.
Keywords
Trade, Capital flows ,Productivity shocks
El-Shagi, M.: Productivity shocks and capital flows, Economic Letters, Vol. 225, 111015, 2023