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Endogenous Business Cycles and Growth

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  • Klaus Wälde

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.

Suggested Citation

  • Klaus Wälde, 2003. "Endogenous Business Cycles and Growth," CESifo Working Paper Series 920, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_920
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    References listed on IDEAS

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    More about this item

    Keywords

    endogenous fluctuations and growth; uncertainty under continuous time;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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