This paper questions the impact of trade integration on business cycle sychronization in the EMU by distinguishing increase of existing trade flows (the intensive margin) and creation of new trade flows (the extensive margin). Using a DSGE model, we find that synchronization is weakened when new...

This paper provides robust evidence that news shocks about future investment-specific technology (IST) constitute a signicant force behind U.S. business cycles. Extending a recent empirical approach to identifying news shocks, we find that positive IST news shocks induce comovement, i.e., raise...

Wage stickiness is incorporated to a New-Keynesian model with variable capital to drive endogenous unemployment fluctuations defined as the log difference between aggregate labor supply and aggregate labor demand. We estimated such model using Bayesian econometric techniques and quarterly US...