Essays in International Economics

This dissertation, entitled Essays in International Economics, consists of a collection of articles and a review chapter. It investigates the economic linkages between countries and how these linkages affect the transmission and propagation of shocks across national borders. For the most part, it focuses on mechanisms that cause variation in economic aggregatesand drive international co-movements, using the framework of calibrated twocountryequilibrium business cycle models.The literature on international business cycle models has resorted to financial frictionsand new sources of disturbances to address the ”international comovement puzzle”and the ”quantity anomaly”. The former refers to the tendency for models to predictnegative cross-country correlations of investment and employment, when the reverse isobserved in the data. The latter refers to the positive gap between consumption and outputcomovements predicted by theory, in contrast to the negative gap seen in the data. Afurther feature of business cycles that the literature has found difficult to address is thecountercyclical behavior of net exports.This dissertation introduces a class of models driven by productivity shocks alonethat feature (i) complete international financial markets, (ii) time nonseparable preferencesand (iii) arbitrarily small wealth effects on labor supply. It is shown that a one-good,two-country model with these characteristics can account for the international comovementpuzzle. It also reduces the gap between international correlations of output andconsumption, but fails to change their order. A version of this model with imperfectlysubstitutable intermediate goods accounts for the international comovement puzzle and,moreover, delivers countercyclical net exports. Contrary to models with restricted internationalmarkets, the models analyzed in this dissertation show little sensitivity to theparameterization of the forcing process for productivity shocks.The dissertation also includes an applied econometric study of international tradelinkages between countries, focusing on Chinese-global trade in resource commodities.Using input-output analysis, and a gravity model of global trade in non-oil resource commodities,it is shown that China’s mainly manufacturing exports have been a significantdriver of its demand for resource commodities over recent decades