IDEAS home Printed from https://ideas.repec.org/a/ekn/ekonom/v7y2004i2p89-120.html
   My bibliography  Save this article

Can a Sunspot Driven Model Replicate Recognizable Business Cycles?

Author

Listed:
  • John D. Tsoukalas

    (University of Maryland and Bank of England)

Abstract

This paper presents a dynamic stochastic general equilibrium model in which there is a small productive role for money. The equilibrium of the model is characterized by indeterminacy. This implies that the economy can display fluctuations at business cycle frequencies even in the absence of shocks to fundamentals. In the model, fluctuations are driven by changes in agents beliefs or \sunspots" that are orthogonal to fundamentals, i.e. preferences and technology. I examine a calibrated version of this model and find that it performs as well as the standard RBC model in matching the covariance properties of the U.S. data. More importantly, computing impulse response functions for a number of macroeconomic time series from the data, I find that it outperforms the RBC model in terms of capturing the cyclical dynamic properties of the U.S. data.

Suggested Citation

  • John D. Tsoukalas, 2004. "Can a Sunspot Driven Model Replicate Recognizable Business Cycles?," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 7(2), pages 89-120, Winter.
    • Handle: RePEc:ekn:ekonom:v:7:y:2004:i:2:p:89-120
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ekn:ekonom:v:7:y:2004:i:2:p:89-120. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Managing Editor (email available below). General contact details of provider: https://edirc.repec.org/data/cyessea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.