Demand shocks and economic fluctuations
AbstractThis paper studies conditions under which demand-side shocks can generate realistic business cycles in RBC models. Although highly persistent demand shocks are necessary for generating procyclical investment, variable capacity utilization and habit formation can reduce the required degree of persistence.
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Bibliographic InfoPaper provided by Federal Reserve Bank of St. Louis in its series Working Papers with number 2006-011.
Date of creation: 2006
Date of revision:
Publication status: Published in Economics Letters, March 2006, 90(3), pp. 373-83
Other versions of this item:
- NEP-ALL-2006-04-01 (All new papers)
- NEP-BEC-2006-04-01 (Business Economics)
- NEP-DGE-2006-04-01 (Dynamic General Equilibrium)
- NEP-MAC-2006-04-01 (Macroeconomics)
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