01762cas a2200265 a 4500 AALejournalIMF006080 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451873597 1018-5941 BD-DhAAL BD-DhAAL Tuesta, Vicente. Cointegrated TFP Processes and International Business Cycles / Vicente Tuesta, Juan Rubio-Ramirez, Pau Rabanal. Washington, D.C. : International Monetary Fund, 2009. 1 online resource (54 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students A puzzle in international macroeconomics is that observed real exchange rates are highly volatile. Standard international real business cycle (IRBC) models cannot reproduce this fact. We show that TFP processes for the U.S. and the "rest of the world," is characterized by a vector error correction (VECM) and that adding cointegrated technology shocks to the standard IRBC model helps explaining the observed high real exchange rate volatility. Also we show that the observed increase of the real exchange rate volatility with respect to output in the last 20 year can be explained by changes in the parameter of the VECM. Mode of access: Internet Rabanal, Pau. Rubio-Ramirez, Juan. IMF Working Papers; Working Paper ; No. 2009/212 Full text available on IMF http://elibrary.imf.org/view/journals/001/2009/212/001.2009.issue-212-en.xml IMF e-Library