Demand shocks and economic fluctuations
This 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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References listed on IDEAS
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- Craig Burnside & Martin Eichenbaum & Jonas Fisher, 2003.
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01-09r, Cornell University, Center for Analytic Economics.
- Benhabib, Jess & Wen, Yi, 2004. "Indeterminacy, aggregate demand, and the real business cycle," Journal of Monetary Economics, Elsevier, vol. 51(3), pages 503-530, April.
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- Wen, Yi, 2002.
"What Does It Take to Explain Procyclical Productivity,"
02-14, Cornell University, Center for Analytic Economics.
- Wen Yi, 2004. "What Does It Take to Explain Procyclical Productivity?," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-40, June.
- Robert E. Hall, 1997.
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NBER Working Papers
5933, National Bureau of Economic Research, Inc.
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- L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
- Marianne Baxter & Robert G. King, 1991. "Productive externalities and business cycles," Discussion Paper / Institute for Empirical Macroeconomics 53, Federal Reserve Bank of Minneapolis.
- Wen, Yi, 2002. "Fickle Consumers versus Random Technology: Explaining Domestic and International Comovements," Working Papers 02-01, Cornell University, Center for Analytic Economics.
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