This paper proposes a two-country general-equilibrium model incorporating a tradable sector with pricing-to-market as well as a nontradable sector. In that case, real exchange rate fluctuations arise from two sources: changes in the relative price of traded goods, that exemplify deviations from...

This paper examines the empirical link between labor market institutions and international business cycle synchronization. Using a data panel of 20 OECD countries over the 1964-2003 period, we evaluate how cross-country labor market heterogeneity affects business cycle comovement. Our estimation...