Dr. Gautham Udupa is currently the Research Director at the Center for Advanced Financial Research and Learning (CAFRAL), Reserve Bank of India.
In his presentation: Multinational Firms, Trade, and the Trade Co-movement Puzzle, Dr. Udupa examines the strong positive correlation between bilateral trade and business cycle co-movement within country pairs as exhibited by existing empirical studies and shows that the relationship weakens for OECD economies when bilateral FDI stock is controlled for, while FDI is significant. He conducts a trade co-movement regression with FDI as an additional variable to show the same.
The two country business cycle model that he develops generates the positive relationship between trade and co-movement, and between FDI and co-movement. The simulation results turn out to be consistent with the empirical regressions with both trade and FDI.
The presentation was followed by an interactive session between Dr. Udupa and the Madras School of Economics Research Cell where he shed light on his years of research at the University of Houston.
Access link to the presentation file