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

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  • Philipp Pfeiffer

    (Technische Universität Berlin)

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

  • Philipp Pfeiffer, 2017. "How much Keynes and how much Schumpeter? An Estimated Macromodel of the US Economy," 2017 Meeting Papers 324, Society for Economic Dynamics.
  • Handle: RePEc:red:sed017:324
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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.

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