文档介绍：World Interest Rate, Business Cycles, and Financial
Intermediation in Small Open Economies
P. Marcelo Oviedo∗
Iowa State University
September 2005
Abstract
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 ex-
tent 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 the recently found effectiveness of interest-rate shocks to cause business cycles
rests more on the statistical properties of the shocks than on the working-capital
constraint; in particular, recent results are only valid when the level and volatility
of the interest rate are high and when the interest rate is negatively correlated with
total factor productivity. The paper also shows that interest-rate shocks cannot be
the sole driving force of business cycles even when the canonical model is augmented
to include a working-capital constraint. The second goal of the paper is to quantita-
tively explore the dynamic properties of the neoclassical growth model extended to
include financial intermediation. It is shown that the extended model with external
effects in financial intermediation can match the negative correlation between GDP
and a domestic borrowing-lending spread if the economy is subject to productivity
shocks but not when it is subject to both productivity and interest-rate shocks.
JEL classification codes: F32, F34, F41
Key words: open-economy business cycles; interest rates; financial intermediation; capital inflows.
∗Economics Department, Iowa State University, Ames IA 50011; tel. +1 (515) 294-5438; fax: +1 (515)
294-0221; e-mail address: ******@. I am than