IDEAS home Printed from https://ideas.repec.org/p/ams/cdws01/4b.3.html
   My bibliography  Save this paper

Near-Future Expectations, Intertemporal Substitution, and Business Cycles

Author

Listed:
  • Toshiya Ishikawa

    (Kyushu Kyoritsu University)

Abstract

This paper incorporates expectations of near-future business cycles in a real business cycle model. The model has random walk technology shocks and endogenous fluctuations in labor effort. Perfect foresight is assumed, that is, economic agents can foresee near-future technology shocks before they occur. Major findings are as follows. (1) When positive (or negative) technology shocks are expected in the near future, intertemporal substitution behavior leads to recessions (or expansions) at present. (2) A smaller size of technology shocks can generate the realistic volatility of business cycles when they can be forecast than otherwise. (3) Most part of fluctuations in the Solow residual are explained by variations in labor effort, and not by technology shocks.

Suggested Citation

  • Toshiya Ishikawa, 2001. "Near-Future Expectations, Intertemporal Substitution, and Business Cycles," CeNDEF Workshop Papers, January 2001 4B.3, Universiteit van Amsterdam, Center for Nonlinear Dynamics in Economics and Finance.
    • Handle: RePEc:ams:cdws01:4b.3
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    Expectations; Intertemporal substitution; Random walk;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ams:cdws01:4b.3. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Christopher F. Baum (email available below). General contact details of provider: https://edirc.repec.org/data/cnuvanl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.