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Endogenous Business Cycles and the Dynamics of Output, Hours, and Consumption

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Author Info
Stephanie Schmitt-Grohe

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Abstract

This paper studies the business-cycle fluctuations predicted by a two-sector endogenous-business-cycle model with sector-specific external increasing returns to scale. It focuses on aspects of actual fluctuations that have been identified both as defining features of business cycles and as ones standard real-business-cycle models cannot explain. For empirically realistic calibrations of the degree of returns to scale, the results suggest that endogenous fluctuations do not provide the dynamic element that is missing in existing real-business-cycle models.

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Publisher Info
Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 90 (2000)
Issue (Month): 5 (December)
Pages: 1136-1159
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Handle: RePEc:aea:aecrev:v:90:y:2000:i:5:p:1136-1159

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  15. Schmitt-Grohe, Stephanie, 1997. "Comparing Four Models of Aggregate Fluctuations due to Self-Fulfilling Expectations," Journal of Economic Theory, Elsevier, vol. 72(1), pages 96-147, January. [Downloadable!] (restricted)
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  23. Rotemberg, Julio J & Woodford, Michael, 1992. "Oligopolistic Pricing and the Effects of Aggregate Demand on Economic Activity," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1153-1207, December. [Downloadable!] (restricted)
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  24. Wen, Yi, 1998. "Capacity Utilization under Increasing Returns to Scale," Journal of Economic Theory, Elsevier, vol. 81(1), pages 7-36, July. [Downloadable!] (restricted)
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  27. Burnside, Craig, 1996. "Production function regressions, returns to scale, and externalities," Journal of Monetary Economics, Elsevier, vol. 37(2-3), pages 177-201, April. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gomes, Orlando, 2007. "Externalities in R&D: a route to endogenous fluctuations," MPRA Paper 2850, University Library of Munich, Germany. [Downloadable!]
  2. Barinci, Jean-Paul & Chéron, Arnaud, 2001. "Real business cycles and the animal spirits hypothesis in a CIA economy," CEPREMAP Working Papers (Couverture Orange) 0110, CEPREMAP. [Downloadable!]
  3. Thomas Lubik & Frank Schorfheide, 2002. "Testing for Indeterminacy in Linear Rational Expectations Models," Computing in Economics and Finance 2002 214, Society for Computational Economics. [Downloadable!]
  4. Nigar Hashimzade & Salvador Ortigueira, 2004. "Endogenous Business Cycle with Search in the Labour Market," Money Macro and Finance (MMF) Research Group Conference 2004 78, Money Macro and Finance Research Group. [Downloadable!]
  5. Yi Wen, 2006. "Granger causality and equilibrium business cycle theory," Working Papers 2005-038, Federal Reserve Bank of St. Louis. [Downloadable!]
    Other versions:
  6. Herrendorf, Berthold & Valentinyi, Akos, 2002. "On the Stability of the Two-Sector Neoclassical Growth Model with Externalities," CEPR Discussion Papers 3435, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  7. Herrendorf, Berthold & Valentinyi, Akos, 2002. "Determinacy Through Intertemporal Capital Adjustment Costs," CEPR Discussion Papers 3581, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Orlando Gomes, 2007. "The Dynamics of Growth and Migrations with Congestion Externalities," Economics Bulletin, Economics Bulletin, vol. 15(1), pages 1-8. [Downloadable!]
  9. Gomes, Orlando, 2006. "Entropy in the creation of knowledge: a candidate source of endogenous business cycles," MPRA Paper 2843, University Library of Munich, Germany. [Downloadable!]
  10. Stefano Eusepi & Bruce Preston, 2008. "Expectations, Learning And Business Cycle Fluctuations," CAMA Working Papers 2008-20, Australian National University, Centre for Applied Macroeconomic Analysis. [Downloadable!]
    Other versions:
  11. Graciela Chichilnisky & Olga Gorbachev, 2004. "Volatility in the knowledge economy," Discussion Papers 0304-13, Columbia University, Department of Economics. [Downloadable!]
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  12. Gomes, Orlando, 2007. "Decentralized allocation of human capital and nonlinear growth," MPRA Paper 2882, University Library of Munich, Germany. [Downloadable!]
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  13. Don Harding & Adrian Pagan, 1999. "Knowing the Cycle," Melbourne Institute Working Paper Series wp1999n12, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne. [Downloadable!]
  14. Thomas Lubik & Frank Schorfheide, 2002. "Testing for Indeterminacy:An Application to U.S. Monetary Policy," Economics Working Paper Archive 480, The Johns Hopkins University,Department of Economics, revised Jun 2003. [Downloadable!]
    Other versions:
  15. FÈVE, Patrick & MATHERON, Julien, 2005. "Can the Kydland-Prescott Model Pass the Cogley-Nason Test?," IDEI Working Papers 350, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
  16. Gomes, Orlando, 2006. "Too much of a good thing: endogenous business cycles generated by bounded technological progress," MPRA Paper 2845, University Library of Munich, Germany. [Downloadable!]
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  17. Nicoletta Batini & Joe Pearlman, 2002. "Too Much Too Soon: Instability and Indeterminacy with Forward-Looking Rules," Computing in Economics and Finance 2002 182, Society for Computational Economics. [Downloadable!]
    Other versions:
  18. Antonio Acconcia & Saverio Simonelli, 2005. "Revisiting the one type permanent shocks hypothesis: Aggregate fluctuations in a multi-sector economy," CSEF Working Papers 137, Centre for Studies in Economics and Finance (CSEF), University of Salerno, Italy, revised 01 Sep 2006. [Downloadable!]
  19. Gomes, Orlando, 2007. "Socially determined time preference in discrete time," MPRA Paper 3442, University Library of Munich, Germany. [Downloadable!]
  20. Gomes, Orlando, 2007. "Consumer confidence, endogenous growth and endogenous cycles," MPRA Paper 2883, University Library of Munich, Germany. [Downloadable!]
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