Economics Department, CEU
FALL 2005

Lecturer: Prof. Attila Rátfai
Course: 1 credit
Office: October 6 Bldg / 811,
Office Hours: By Appointment, Email:

The aim of this course is to introduce students to the field of international business cycle analysis. The course develops a set of
tools for studying the macroeconomic implications of fluctuations in international capital flows affecting small open economies,
with an emphasis on fluctuations in emerging markets. The course blends elements of Real Business Cycle theory and
International Finance. The first part of the course develops a workhorse RBC-style model for studying business cycles and
capital flows in small open economies subject to stochastic, non-insurable shocks, and extends it to introduce multi-sector
production structures. The rest of the course explores how this model can be modified and enriched to study international
busniess cycles. Theory and data analysis are treated in roughly equal weight throughout.


1. Data (300 min)
Agénor, Pierre-Richard, C. John McDermott and Eswar S. Prasad (2000): “Macroeconomic
Fluctuations in Developing Countries: Some Stylized Facts,” The World Bank Economic
Review, pp. 251-285

Agresti, Anna-Maria and Benoit Mojon (2001): “Some Stylized Facts on the Euro Area Business
Cycle,” Working Paper #95, European Central Bank

Aguiar, Mark and Gita Gopinath (2004): “Emerging Market Business Cycles: The Cycle is the
Trend”, NBER WP #10734
Alper, C. Emre (2002): “Business Cycles, Excess Volatility and Capital Flows: Evidence
from Mexico and Turkey”, Russian and East European Finance and Trade, pp. 22-54

Backus, David K. and Patrick J. Kehoe (1992): “International Evidence on the Historical
Properties of Business Cycles,” American Economic Review, pp. 864-888

Basu, Susanto and Alan M. Taylor (1999): “Business Cycles in International Historical
Perspective,” Journal of Economic Perspectives Vol. 13, pp. 45-68

Benczúr, Péter and Attila Rátfai (2005): “Economic Fluctuations in Central and Eastern
Europe. The Facts”, manuscript

Benczúr, Péter and Attila Rátfai (2006): “Macroeconomic Fluctuations around the Globe”,

Bergman, U. Michael, Michael D. Bordo and Lars Jonung (1998): “Historical Evidence
on Business Cycles. The International Experience”, manuscript

Bjornland, Hilde Christiane (2000): “Detrending Methods and Stylized Facts of Business
Cycles in Norway - An International Comparison”, Empirical Economics, pp. 369-392

Christodoulakis, Nicos, Sophia P. Dimelis and Tryphon Kollintzas (1993): “Comparison of
Business Cycles in Greece and the EC: Idiosyncracies and Regularities”, CEPR DP #809

Fiorito, Riccardo and Tryphone Kollintzas (1994): “Stylized Facts of Business Cycles in the
G7 from a Real Business Cycle Perspective,” European Economic Review, pp. 235-69

Kaminsky, Graciela L., Carmen M. Reinhart and Carlos A. Végh (2004): “When It Rains,
It Pours: Procyclical Capital Flows and Macroeconomic Policies”, NBER Macroeconomic
Annual, forthcoming

2. Theory (300 min)

Aguiar, Mark, Manuel Amador and Gita Gopinath (2005): “Fiscal Policy Amplified Cycles”,

Ambler, Steve, Emanuela Cardia and Christian Zimmermann (2002): “International
Transmission of the  Business Cycle in a Multi-Sector Model”, European Economic
Review 46, pp. 273-300

Backus, David K., Patrick J. Kehoe and Finn E. Kydland (1992), “International Real Business
Cycles,”  Journal of Political Economy, pp. 745-775

Backus, David K., Patrick J. Kehoe and Finn E. Kydland (1994), “Dynamics of the Trade
Balance and  the Terms of Trade: The J-Curve?” American Economic Review, pp. 84-103

Burgoeing, Raphael and Raimundo Soto (2002): “Testing Real Business Cycle Models in
an Emerging  Economy”, manuscript

Burstein, Ariel, Christopher Johann Kurz and Linda Tesar (2005): “Trade, Production Sharing
and the  International Transmission of Business Cycles”, manuscript

Canova, Fabio and Harris Dellas (1993): “Trade Interdependence and the International
Business Cycle”,  Journal of International Economics, pp. 23-47

Kose, M. Ayhan and Kei-Mu Yi (2001): “International Trade and Business Cycles: Is Vertical
Specialization the Missing Link?”, American Economic Review, pp. 371-375

Kose, M. Ayhan and Kei-Mu Yi (2005): “Can the Standard International Business Cycle Model
Explain  the Relation Between Trade and Comovement?” , manuscript

Kouparitsas, Michael A. (1996): “North-South Business Cycles,” Working Paper 96-9, Federal
Reserve  Bank of Chicago

Mendoza, Enrique (1995): “The Terms of Trade, the Real Exchange Rate and Economic
Fluctuations,”  International Economic Review, pp. 101-137

Mark, Nelson C. (2001): “International Macroeconomics and Finance”, Blackwell, pp. 137-160

Neumeyer, Pablo A. and Fabrizio Perri (2005): “Business Cycles in Emerging Economies: The
Role of  Interest Rates”, Journal of Monetary Economics, pp. 345-380

Ravn, Morten O. (1997): “International Business Cycles in Theory and in Practice”, Journal of
International Money and Finance, pp. 255-283