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How much Keynes and how much Schumpeter? An Estimated Macromodel of the US Economy

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  • Cozzi, Guido
  • Pataracchia, Beatrice
  • Ratto, Marco
  • Pfeiffer, Philipp

Abstract

The macroeconomic experience of the last decade stressed the importance of jointly studying the growth and business cycle fluctuations behavior of the economy. To analyze this issue, we embed a model of Schumpeterian growth into an estimated medium-scale DSGE model. Results from a Bayesian estimation suggest that Investment risk premia are a key driver of the slump following the Great Recession. Endogenous innovation dynamics amplifies financial crises and helps explain the slow recovery. Moreover, financial conditions also account for a substantial share of R&D Investment dynamics.

Suggested Citation

  • Cozzi, Guido & Pataracchia, Beatrice & Ratto, Marco & Pfeiffer, Philipp, 2017. "How much Keynes and how much Schumpeter? An Estimated Macromodel of the US Economy," MPRA Paper 77771, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:77771
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    References listed on IDEAS

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    Cited by:

    1. Marcin Bielecki, 2017. "Business cycles, innovation and growth: welfare analysis," Working Papers 2017-19, Faculty of Economic Sciences, University of Warsaw.
    2. Marco Luca Pinchetti, 2017. "Creative Destruction Cycles: Schumpeterian Growth in an Estimated DSGE Model," Working Papers ECARES ECARES 2017-04, ULB -- Universite Libre de Bruxelles.

    More about this item

    Keywords

    Endogenous growth; New Keynesian Economics; R&D; Schumpeterian Growth; Bayesian Estimation.;

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O42 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Monetary Growth Models

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