Why Does Consumption Lead the Business Cycle?
AbstractConsumption in the US leads output at the business cycle frequency. Standard RBC models predict the opposite. We show in this paper that the lack of an endogenous propagation mechanism that can support demand shocks is responsible for the discrepancy between RBC theory and data.
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Bibliographic InfoPaper provided by Cornell University, Center for Analytic Economics in its series Working Papers with number 01-08.
Date of creation: 2001
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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.:
- Roger E.A. Farmer & Jang Ting Guo, 1992.
"Real Business Cycles and the Animal Spirits Hypothesis,"
UCLA Economics Working Papers
680, UCLA Department of Economics.
- Farmer Roger E. A. & Guo Jang-Ting, 1994. "Real Business Cycles and the Animal Spirits Hypothesis," Journal of Economic Theory, Elsevier, vol. 63(1), pages 42-72, June.
- Cogley, T. & Nason, J.M., 1994.
"Output Dynamics in Real Business Cycle Models,"
UBC Departmental Archives
94-28, UBC Department of Economics.
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