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New Perspectives On Depreciation Shocks As A Source Of Business Cycle Fluctuations

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  • Furlanetto, Francesco
  • Seneca, Martin

Abstract

In this paper we study the transmission of capital depreciation shocks. The existing literature in the real business cycle tradition has concluded that these shocks are irrelevant to business cycle fluctuations. We show that they are potentially important drivers of aggregate fluctuations in a new Keynesian model. Nominal rigidities and some persistence in the shock process are the key ingredients that generate co-movement across real variables.

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  • Furlanetto, Francesco & Seneca, Martin, 2014. "New Perspectives On Depreciation Shocks As A Source Of Business Cycle Fluctuations," Macroeconomic Dynamics, Cambridge University Press, vol. 18(6), pages 1209-1233, September.
    • Handle: RePEc:cup:macdyn:v:18:y:2014:i:06:p:1209-1233_00
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    3. Kevin J. Lansing, 2011. "Asset pricing with concentrated ownership of capital," Working Paper 2011/18, Norges Bank.
    4. Giuliano Curatola & Michael Donadelli & Patrick Gruning & Christoph Meinerding, 2016. "Investment-Specific Shocks, Business Cycles, and Asset Prices," Bank of Lithuania Working Paper Series 36, Bank of Lithuania.
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    7. Jasmina Hasanhodzic & Laurence J. Kotlikoff, 2013. "Generational Risk–Is It a Big Deal?: Simulating an 80-Period OLG Model with Aggregate Shocks," BYU Macroeconomics and Computational Laboratory Working Paper Series 2013-01, Brigham Young University, Department of Economics, BYU Macroeconomics and Computational Laboratory.
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    10. Francesco Furlanetto & Martin Seneca, 2010. "Investment-specific technology shocks and consumption," Working Paper 2010/30, Norges Bank.
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    12. Parra-Alvarez, Juan Carlos, 2018. "A Comparison Of Numerical Methods For The Solution Of Continuous-Time Dsge Models," Macroeconomic Dynamics, Cambridge University Press, vol. 22(6), pages 1555-1583, September.
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    15. Stéphane Auray & Aurélien Eyquem, 2014. "War, Taxes and Trade," Working Papers 2014-29, Center for Research in Economics and Statistics.
    16. Arbex, Marcelo & Batu, Michael, 2020. "What if people value nature? Climate change and welfare costs," Resource and Energy Economics, Elsevier, vol. 61(C).
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    19. Francois Gourio, 2012. "Disaster Risk and Business Cycles," American Economic Review, American Economic Association, vol. 102(6), pages 2734-2766, October.
    20. Tom Holden, 2012. "Medium-frequency cycles and the remarkable near trend-stationarity of output," School of Economics Discussion Papers 1412, School of Economics, University of Surrey.
    21. Belousova, Irina, 2017. "The role of endogenous capital depreciation rate in Dynamic Stochastic General Equilibrium models: Evidence from Canada," MPRA Paper 102036, University Library of Munich, Germany.
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    23. Michael Donadelli & Marcus Jüppner & Antonio Paradiso & Christian Schlag, 2019. "Temperature Volatility Risk," Working Papers 2019:05, Department of Economics, University of Venice "Ca' Foscari".
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    25. Michael Donadelli & Marcus Jüppner & Antonio Paradiso & Christian Schlag, 2021. "Computing Macro-Effects and Welfare Costs of Temperature Volatility: A Structural Approach," Computational Economics, Springer;Society for Computational Economics, vol. 58(2), pages 347-394, August.

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    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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