FALL 2006

Lecturer: Attila Rátfai
Course: 2 credits
Office: Nador 11 Bldg / 405
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 affectingsmall 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 business cycles.Theory and data analysis are treated in roughly equal weight throughout.

Assessment is based on a project requirement (50%) and final exam (50%).


1. Developed Economies

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

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

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

*Backus, David K., Patrick J. Kehoe and Finn E. Kydland (1995): “International Business Cycles: Theory and Evidence,”
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

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

*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

Marcet, Albert and Morten Ravn (2004): “The HP-Filter in Cross-Country Comparison,” CEPR Discussion Paper #4244

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

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

2. Emerging Markets

*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

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

*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
*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”, manuscript

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, F. (2003): “The Transmission of US Shocks to Latin American Countries,” CEPR Discussion Paper No. 3963

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

*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

*Kydland, Finn E. and Carlos Zaragaza (1997): “Is the Business Cycle of Argentina Different?,” Federal Reserve Bank of
Dallas Economic Review, pp. 21-36

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

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

* Readings with an asterisk are required.