Expectations, Inter-Sectorial Relationships and the Business Cycle
AbstractThis paper presents a stochastic dynamic general equilibrium model calibrated for Venezuela that incorporates inter-sectorial relationships. With this model it is possible to assess the impact on the aggregate economic activity generated by productivity shocks or demand shocks to a specific sector and/or how changes at the aggregate level could affect the sectorial activity. The model is used to evaluate the aggregate and sectorial responses to shocks of different nature, under diverse assumptions about the inter-sectorial relationships and expectations formation. The results suggest that the omission of inter-sectorial relations and inadequate treatment of expectations can produce unrealistic results or dynamics. In quantitative terms, the omission of rational expectations seems to be less critical. However, this could change in an environment with more frictions.
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Bibliographic InfoArticle provided by Central Bank of Argentina, Economic Research Department in its journal Ensayos Económicos.
Volume (Year): 1 (2011)
Issue (Month): 63 (July - September)
dynamic stochastic general equilibrium models; inter-sectorial relationships; open economy; Venezuela;
Find related papers by JEL classification:
- B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
- C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
- C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
- C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
- D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
- D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
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