The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
This paper provides some new empirical perspectives on the relationship between international trade and macroeconomic fluctuations in industrial economies. First, a comprehensive set of stylized facts concerning fluctuations in trade variables and their determinants are presented. A measure of the quantitative importance of international trade for the propagation of domestic business cycles is then constructed, focusing on the role of external trade as a catalyst for cyclical recoveries. Finally, structural vector autoregression models are used to characterize the joint dynamics of output, exchange rates, and trade variables in response to different types of macroeconomic shocks.