Real business cycles in open economies

This paper surveys recent literature on real business cycles in open economies. It focuses on the empirical regularities of international macroeconomic fluctuations and provides a short discussion of the differences between the,,stylized facts" of business cycles in advanced and in developing countries. The paper reviews various real-business-cycle models, discerning one-sector models from their multi-good modifications. It also highlights discrepancies between theoretical predictions and data, such as "consumption/output correlation puzzle", "investment correlation puzzle", and price anomaly". The paper concludes with a brief consideration of prospective directions for future research.