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Endogenous Business Cycles and the Dynamics of Output, Hours, and Consumption

  • Stephanie Schmitt-Grohe

This paper studies the business-cycle fluctuations predicted by a two-sector endogenous-business-cycle model with sector-specific external increasing returns to scale. It focuses on aspects of actual fluctuations that have been identified both as defining features of business cycles and as ones standard real-business-cycle models cannot explain. For empirically realistic calibrations of the degree of returns to scale, the results suggest that endogenous fluctuations do not provide the dynamic element that is missing in existing real-business-cycle models.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/aer.90.5.1136
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 90 (2000)
Issue (Month): 5 (December)
Pages: 1136-1159

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Handle: RePEc:aea:aecrev:v:90:y:2000:i:5:p:1136-1159
Note: DOI: 10.1257/aer.90.5.1136
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