This paper examines whether a two-country real business cycle (RBC) model can simultaneously explain domestic and international business cycle patterns. The authors find significant discrepancies between the model and data, particularly in the correlation of consumption and output across countries. In the data, output is more highly correlated across countries than consumption, while the model shows the opposite. The authors extend RBC theory to open economies, considering how international borrowing and lending influence aggregate fluctuations. In open economies, consumption and investment decisions are no longer constrained by domestic production, leading to less variable consumption and investment compared to closed economies. The model also considers international comovements, such as the correlation between saving and investment rates, which are perfectly correlated in closed economies but may be imperfectly correlated in open economies. The authors introduce a two-country extension of Kydland and Prescott's (1982) closed economy model, allowing for different technology shocks and international capital markets. They find that openness significantly alters the nature of closed-economy comovements, with consumption being smoother and investment more volatile in the model. The model also shows larger variability in investment and net exports compared to data. The authors introduce a small transportation cost to reduce variability and produce procyclical investment, but the consumption/output correlation remains larger than in the data. They conclude that international risk sharing with complete markets is not the sole explanation for the consumption/output discrepancy. The study contributes to the growing body of work on international business cycles from the perspective of dynamic general equilibrium theory.This paper examines whether a two-country real business cycle (RBC) model can simultaneously explain domestic and international business cycle patterns. The authors find significant discrepancies between the model and data, particularly in the correlation of consumption and output across countries. In the data, output is more highly correlated across countries than consumption, while the model shows the opposite. The authors extend RBC theory to open economies, considering how international borrowing and lending influence aggregate fluctuations. In open economies, consumption and investment decisions are no longer constrained by domestic production, leading to less variable consumption and investment compared to closed economies. The model also considers international comovements, such as the correlation between saving and investment rates, which are perfectly correlated in closed economies but may be imperfectly correlated in open economies. The authors introduce a two-country extension of Kydland and Prescott's (1982) closed economy model, allowing for different technology shocks and international capital markets. They find that openness significantly alters the nature of closed-economy comovements, with consumption being smoother and investment more volatile in the model. The model also shows larger variability in investment and net exports compared to data. The authors introduce a small transportation cost to reduce variability and produce procyclical investment, but the consumption/output correlation remains larger than in the data. They conclude that international risk sharing with complete markets is not the sole explanation for the consumption/output discrepancy. The study contributes to the growing body of work on international business cycles from the perspective of dynamic general equilibrium theory.