Testing International Real Business Cycle Model in Thailand: Why is its cycle so volatile?

Authors

  • Jirawat Jaroensathapornkul School of Economics and Public Policy, Srinakharinwirot University, Thailand

Keywords:

Thailand Business Cycle, United states Business Cycle, Two-country real business cycle model, Country size

Abstract

Thailand as small country and the United States as large, the stylized fact reveals a striking difference: The fluctuation of aggregate cycle is higher in the small country. The research explores the reasons for this volatility using a two-country real business cycle model, where the social planner faces with the different country sizes. After parameterization and replication are performed, the benchmark economy roughly conforms to the stylized fact in important dimensions. In the experiment, the country size parameters of the United States are replaced on the parameter of Thailand. As the simulation results, the higher fluctuation of Thailand’s aggregate cycle is almost totally attributable to the high variance of the shocks.

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How to Cite

Jaroensathapornkul, J. (2016). Testing International Real Business Cycle Model in Thailand: Why is its cycle so volatile?. Applied Economics Journal, 21(2), 52–71. Retrieved from https://so01.tci-thaijo.org/index.php/AEJ/article/view/57243

Issue

Section

Research Articles