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The New Classical Theory And The Real Business Cycle Model

Author

Listed:
  • Oana Simona HUDEA (CARAMAN)

    (Academy of Economic Studies, University of Bucharest)

  • Sorin George TOMA

    (Academy of Economic Studies, University of Bucharest)

  • Marin BURCEA

    (Academy of Economic Studies, University of Bucharest)

Abstract

The present paper aims at describing some key elements of the new classical theory-related model, namely the Real Business Cycle, mainly describing the economy from the perspective of a perfectly competitive market, characterised by price, wage and interest rate flexibility. The rendered impulse-response functions, that help us in revealing the capacity of the model variables to return to their steady state under the impact of a structural shock, be it technology or monetary policy oriented, give points to the neutrality of the monetary entity decisions, therefore confirming the well-known classical dichotomy existing between the nominal and the real factors of the economy.

Suggested Citation

  • Oana Simona HUDEA (CARAMAN) & Sorin George TOMA & Marin BURCEA, 2014. "The New Classical Theory And The Real Business Cycle Model," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 5, pages 25-30, November.
    • Handle: RePEc:cmj:seapas:y:2014:i:5:p:25-30
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    More about this item

    Keywords

    New classical theory; Real business cycle; Rational expectations; Macroeconomic modelling; Technology shock; Monetary policy;
    All these keywords.

    JEL classification:

    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B23 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Econometrics; Quantitative and Mathematical Studies
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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