Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Dallas
Globalization Institute Working Papers
Simple models to understand and teach business cycle macroeconomics for emerging market and developing economies
Roberto Duncan
Abstract

The canonical neoclassical model is insufficient to understand business cycle fluctuations in emerging market and developing economies (EMDEs). I reformulate the models proposed by Aguiar and Gopinath (2007) and Neumeyer and Perri (2005) in simple settings that can be used to do back-of-the-envelope analysis and teach business cycle macroeconomics for EMDEs at the undergraduate level. The simplified models are employed for qualitatively explaining facts such as the countercyclicality of the trade balance and the real interest rate, and the higher volatility of output, consumption, and real wages compared with those observed in advanced countries. Simple extensions can be used to understand other empirical facts such as large capital outflows and output drops, small government spending he cyclical behavior of prices, and the negative association between currency depreciations and output.


Download Full text
Cite this item
Roberto Duncan, Simple models to understand and teach business cycle macroeconomics for emerging market and developing economies, Federal Reserve Bank of Dallas, Globalization Institute Working Papers 252, 01 Sep 2015.
More from this series
Note: Published as: Duncan, Roberto (2015), "A Simple Model to Teach Business Cycle Macroeconomics for Emerging Market and Developing Economies," The Journal of Economic Education 46 (4): 394-402.
JEL Classification:
Subject headings:
DOI: 10.24149/gwp252
For corrections, contact Amy Chapman ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal