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Schumpeterian Foundations of Real Business Cycles

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  • Nuno Barrau, Galo
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    Abstract

    In this paper I propose a dynamic stochastic general quilibrium model that includes many of Schumpeter’s ideas about growth and business cycles. In this model, technology advances are due to the introduction of vertical innovations by entrepreneurs who are funded by banks. The model is solved and estimated by bayesian methods for the U.S. economy to compute the value of some of its structural parameters. Results show that the presented innovation mechanism is roughly equivalent in terms of volatilies, correlations and impulse responses to the technology shocks in real business cycle models. Notwithstanding, the model differs from traditional RBC models as it incorporates technology catch-up features that affect the convergence to the steady-state.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 9430.

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    Date of creation: 20 Jun 2008
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    Handle: RePEc:pra:mprapa:9430

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