Informational Asymmetries and the International Transmission of Business Cycles
Keywords:
informational asymmetries, business cycles, international transmission, nontraded goods, monetary shocks, exchange ratesAbstract
Several recent papers have analyzed the international transmission of economic disturbances in a context in which all goods are traded. Additionally, those papers assume alternatively full contemporaneous information on financial variables is not available at all. A key feature of the model is that agents in each country observe all those variables directly linked with the markets in which they usually trade but they do not have access to the information provided by the market for nontraded goods in the foreign country. Therefore, the introduction of nontraded goods provides a natural setting for assuming an asymmetry in the information set available to agents across countries. It is shown that this asymmetry is crucial for the existence of real effects associated with monetary shocks and also for the nature of the international transmission of business cycles across countries.Downloads
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Copyright (c) 1988 Patricio Mujica
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