Demand Shocks and Open Economy Puzzles
在标准两国国际实际商业周期模型中引入商品市场摩擦，发现需求冲击能同时提高产出、消费、生产率、贸易逆差并导致实际汇率升值，从而解决Backus-Smith谜题等开放经济难题。
We pose good markets frictions on top of an otherwise standard two-country international real business cycle (IRBC) model. Shopping for goods takes effort, which prevents perfect matching between customers and producers. An increase in search effort implies increased measured productivity. Demand shocks increase expenditures and search effort simultaneously increasing output, consumption, productivity, and the trade deficit and appreciating the real exchange rate. Thus we solve the Backus-Smith puzzle and we show that the cross country correlation of consumption is higher than that of output. Standard IRBC models cannot account for these puzzles along with movements in TFP.