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Abstract:
This paper analyses the stylized facts of business cycles in Mexico and Turkey, by comparing the results obtained for the United States. Excess volatility of real output as well as the relative volatility of consumption seems to be a problem for real business cycle models to account for. Fiscal policies and money do not yield clear-cut patterns. Both the price levels and the inflation rates turn out to be moving countercyclically, suggesting the appropriateness of a supply-driven business cycle model rather than a demand-driven one for Mexico and Turkey. Labour inputs and productivity are procyclical but do not lead the output cycle. Capital inflows, especially long-term capital inflows seem to matter since they turn out to be strongly procyclical and lead the cycle by one quarter. This observation is also consistent with the result of a supply-driven model's relevance for the two countries.
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