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Endogenous business cycles and growth

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  • Klaus Walde

Abstract

Current explanations why a growing economy necessarily goes through booms and recessions predict countercyclical R&D investment. As this is very controversial from an empirical perspective, a stochastic Poisson model of endogenous business cycles and growth is presented where the determinants of the cyclical behaviour of R&D investment are analytically studied. Providing an explicit expression for the expected length of a cycle shows that high frequency fluctuations can indeed be understood by this approach. It is also shown how small technological improvements translate into large aggregate fluctuations.

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Bibliographic Info

Paper provided by Money Macro and Finance Research Group in its series Money Macro and Finance (MMF) Research Group Conference 2003 with number 109.

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Date of creation: 27 Sep 2004
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Handle: RePEc:mmf:mmfc03:109

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Web page: http://www.essex.ac.uk/afm/mmf/index.html

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