World Interest Rate , Business Cycles , and Financial Intermediation in Small Open Economies

@inproceedings{Oviedo2005WorldIR,
  title={World Interest Rate , Business Cycles , and Financial Intermediation in Small Open Economies},
  author={P. Marcelo Oviedo},
  year={2005}
}
The consensus about the ability of the standard open-economy neoclassical growth model to account for interest-rate driven business cycles has changed over time: whereas early research concluded that business cycles are neutral to interest-rate shocks, more recent investigations suggest that these shocks can explain a large extent of the business cycles of a small open economy when firms borrow to pay for their labor cost before cashing their sales. The first goal of this paper is to show that… CONTINUE READING
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