Business Cycles: Fact, Fallacy and Fantasy by Sumru G. Altug

By Sumru G. Altug

This e-book presents an summary of the fashionable idea and empirics of commercial cycles. Written via one of many pioneering authors during this box, it examines the concept of a enterprise cycle and discusses substitute methods to modeling. Arguably, essentially the most vital debates during this literature has been the difficulty of matching a enterprise cycle to the knowledge. of their unique contribution, Kydland and Prescott (1982) proposed the tactic of calibration as a manner of analyzing the consequences of a company cycle version; but, even at its inception, this technique got here less than feedback from quite a few resources. This monograph will study a few of these criticisms and talk about replacement techniques which were recommend. extra in most cases, it is going to talk about what lies forward for contemporary company cycle thought.

  • Facts
  • Models of commercial Cycles
  • International enterprise Cycles
  • New Keynesian versions
  • Business Cycles in rising marketplace Economies
  • Matching the version to the information
  • Future components for examine

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Hansen [112] calibrates this model by specifying values for the unknown parameters θ, δ, β, A, and the stochastic process for the technology shock using the approach in Kydland and Prescott [141]. 7 compared to the model without indivisibilities which implies a value near unity. 2. The Productivity Puzzle Several resolutions of the productivity puzzle have been suggested. These typically specify an extra margin regarding individuals’ choices that helps break the close link between hours and productivity implied by the standard model.

October 9, 2009 15:12 9in x 6in 26 b808-ch02 Business Cycles: Fact, Fallacy and Fantasy j where E ( i,t j,t ) = 0 for i = j. The coefficients bi denote the factor loadings, and show how much of the variation in yi,t can be explained by each factor. Thus, the model assumes that the behavior of M × N time series can be explained by N + R + 1 factors, where N + R + 1 < MN . 8) where E (ui,t ui,t−s ) = σi2 for i = j and s = 0, and zero otherwise. Let fk,t = fk ,t . 10) where E (ufk ,t ufk ,t ) = σf2 , E (ufk ,t ui,t−s ) = 0 for all k, i, s.

In the former, lagged GDP growth of the center country is included alongside the lagged value of the own country’s GDP growth in the VAR representation. In the trade linkages version, lagged GDP growth of the major trading partner is included in place of the center country’s. They find that both global (common) shocks and transmission have become more important. However, the importance of transmission for peripheral countries arises only in the trade model, suggesting that it is not transmission from the center country that accounts for the increased role of transmission.

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