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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- 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.
- 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.
- Cogley, Timothy & Nason, James M, 1995.
"Output Dynamics in Real-Business-Cycle Models,"
American Economic Review,
American Economic Association, vol. 85(3), pages 492-511, June.
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