Download or read book Business Cycle Models with Indeterminacy written by Mark Weder and published by Springer Science & Business Media. This book was released on 2012-12-06 with total page 186 pages. Available in PDF, EPUB and Kindle. Book excerpt: Three original models which explain business cycles as a result of self-fulfilling expectations are presented. The models are founded on the structure of dynamic general equilibrium theory. Market power and increasing returns to scale are introduced which allow indeterminancy of the Rational Expectations equilibria to be obtained. Unlike the majority of existing literature on this subject, the departures from perfect markets and constant returns presented in these models are very low and, more importantly, at a realistic level to achieve the respective results. It is demonstrated in all of the presented models that stylized facts of the business cycle can be reproduced.

Download or read book Growth and Business Cycles with Equilibrium Indeterminacy written by Kazuo Mino and published by . This book was released on 2017 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Indeterminacy in real business cycle models written by Wei Xiao and published by . This book was released on 2001 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Nonlinear Dynamics in Equilibrium Models written by John Stachurski and published by Springer Science & Business Media. This book was released on 2012-01-25 with total page 454 pages. Available in PDF, EPUB and Kindle. Book excerpt: Optimal growth theory studies the problem of efficient resource allocation over time, a fundamental concern of economic research. Since the 1970s, the techniques of nonlinear dynamical systems have become a vital tool in optimal growth theory, illuminating dynamics and demonstrating the possibility of endogenous economic fluctuations. Kazuo Nishimura's seminal contributions on business cycles, chaotic equilibria and indeterminacy have been central to this development, transforming our understanding of economic growth, cycles, and the relationship between them. The subjects of Kazuo's analysis remain of fundamental importance to modern economic theory. This book collects his major contributions in a single volume. Kazuo Nishimura has been recognized for his contributions to economic theory on many occasions, being elected fellow of the Econometric Society and serving as an editor of several major journals. Chapter “Introduction” is available open access under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License via link.springer.com.

Download or read book The Evolution of Endogenous Business Cycles written by Roger E. A. Farmer and published by . This book was released on 2012 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper distinguishes two kinds of Endogenous Business Cycle models; EBC1 models, which display dynamic indeterminacy, and EBC2 models, which display steady-state indeterminacy. Both strands of the literature have their origins in the sunspot literature that developed at the University of Pennsylvania in the 1980s. I argue that EBC1 models are part of the evolution of modern macroeconomics that has classical roots dating back to the 1920s. EBC2 models provide a microfoundation to one of the most important ideas to emerge from Keynes' (1936) General Theory; that high involuntary unemployment can persist as part of the steady-state equilibrium of a market economy.

Download or read book Growth and Business Cycles with Equilibrium Indeterminacy written by Kazuo Mino and published by Springer. This book was released on 2017-07-11 with total page 240 pages. Available in PDF, EPUB and Kindle. Book excerpt: Over the past two decades, the issue of equilibrium indeterminacy has been one of the major research concerns in macroeconomic dynamics. Growth and Business Cycles with Equilibrium Indeterminacy discusses the main topics in this literature. Based on comprehensive surveys and the author’s original research, this book explores sunspot-driven fluctuations in real business cycle models, multiple equilibria in endogenous growth models, and the stabilization effects of fiscal and monetary policy rules. The book also considers equilibrium indeterminacy in open economy models.

Download or read book Heterogeneous Expectations Indeterminacy and Postwar US Business Cycles written by Francisco Ilabaca and published by . This book was released on 2020 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper estimates a New Keynesian model extended to include heterogeneous expectations, to revisit the evidence that postwar US macroeconomic data can be explained as the outcome of passive monetary policy, indeterminacy, and sunspot-driven fluctuations in the pre-1979 sample, with a switch to active monetary policy and a determinate equilibrium starting in the early 1980s. Different shares of consumers and firms form either rational expectations, or adaptive and extrapolative expectations. The inclusion of heterogeneous expectations alters the determinacy properties of the model compared to the corresponding case under exclusively rational expectations. The Taylor principle is neither necessary nor sufficient, as the details of expectations may matter more for equilibrium stability. The model is estimated with Bayesian techniques, using rolling windows and allowing the parameters to fall both in the determinacy and indeterminacy regions. The estimates reveal large shares of agents who depart from rational expectations; heterogeneous expectations are preferred by the data everywhere in the sample. The results confirm that macroeconomic data in the early windows are better explained by indeterminacy, while determinacy is favored over the latest two decades. We uncover, however, some subsamples that include the 1980s and 1990s in which the Taylor principle is satisfied, but expectations becoming extrapolative raise the probability of indeterminacy to 50% and more.

Download or read book Hysteresis and Business Cycles written by Ms.Valerie Cerra and published by International Monetary Fund. This book was released on 2020-05-29 with total page 50 pages. Available in PDF, EPUB and Kindle. Book excerpt: Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.

Download or read book Technology Shocks and Aggregate Fluctuations written by Mr.Pau Rabanal and published by International Monetary Fund. This book was released on 2004-12-01 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: Our answer: Not so well. We reached that conclusion after reviewing recent research on the role of technology as a source of economic fluctuations. The bulk of the evidence suggests a limited role for aggregate technology shocks, pointing instead to demand factors as the main force behind the strong positive comovement between output and labor input measures.

Download or read book Can Indeterminacy and Self Fulfilling Expectations Help Explain International Business Cycles A Preliminary Investigation written by Stephen McKnight and published by . This book was released on 2016 with total page 31 pages. Available in PDF, EPUB and Kindle. Book excerpt: We introduce equilibrium indeterminacy into a two-country incomplete asset model with imperfect competition and analyze whether self-fulfilling, belief-driven fluctuations (i.e., sunspot shocks) can help resolve the major puzzles of international business cycles. We find that a combination of productivity and sunspot shocks can account for the observed counter-cyclical behavior in international relative prices and quantities, while simultaneously generating volatilities that match the data. The indeterminacy model can also resolve the Backus-Smith puzzle without requiring a low value of the trade elasticity.

Download or read book Indeterminacy with Non separable Utility written by Rosalind L. Bennett and published by . This book was released on 1999 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Instability and Indeterminacy in a Simple Search and Matching Model written by Michael U. Krause and published by . This book was released on 2016 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: We demonstrate the possibility of indeterminacy and non-existence of equilibrium dynamics in a standard business cycle model with search and matching frictions in the labor market. Our results arise for empirically plausible parametrizations and do not rely upon a mechanism such as increasing returns.

Download or read book Assessing Dsge Models with Capital Accumulation and Indeterminacy written by Mr.Vadim Khramov and published by International Monetary Fund. This book was released on 2012-03-01 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: The simulated results of this paper show that New Keynesian DSGE models with capital accumulation can generate substantial persistencies in the dynamics of the main economic variables, due to the stock nature of capital. Empirical estimates on U.S. data from 1960:I to 2008:I show the response of monetary policy to inflation was almost twice lower than traditionally considered, as capital accumulation creates an additional channel of influence through real interest rates in the production sector. Versions of the model with indeterminacy empirically outperform determinate versions. This paper allows for the reconsideration of previous findings and has significant monetary policy implications.

Download or read book The Econometrics of Indeterminacy written by Roger E. A. Farmer and published by . This book was released on 1994 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Indeterminacy and Sector specific Externalities written by Jess Benhabib and published by . This book was released on 1995 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Optimal Unemployment Insurance written by Andreas Pollak and published by Mohr Siebeck. This book was released on 2007 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: Designing a good unemployment insurance scheme is a delicate matter. In a system with no or little insurance, households may be subject to a high income risk, whereas excessively generous unemployment insurance systems are known to lead to high unemployment rates and are costly both from a fiscal perspective and for society as a whole. Andreas Pollak investigates what an optimal unemployment insurance system would look like, i.e. a system that constitutes the best possible compromise between income security and incentives to work. Using theoretical economic models and complex numerical simulations, he studies the effects of benefit levels and payment durations on unemployment and welfare. As the models allow for considerable heterogeneity of households, including a history-dependent labor productivity, it is possible to analyze how certain policies affect individuals in a specific age, wealth or skill group. The most important aspect of an unemployment insurance system turns out to be the benefits paid to the long-term unemployed. If this parameter is chosen too high, a large number of households may get caught in a long spell of unemployment with little chance of finding work again. Based on the predictions in these models, the so-called "Hartz IV" labor market reform recently adopted in Germany should have highly favorable effects on the unemployment rates and welfare in the long run.

Download or read book Indeterminacy and Business Fluctuations Under Partial Capital Mobility written by Jong-Kyou Jeon and published by . This book was released on 2017 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt: The paper examines a modified real business cycle model of a small open economy such as the Korean economy. The model economy is assumed to produce output with two types of capital: traded capital and non-traded capital. Domestic individuals can borrow from the world capital market only by using traded capital as collateral, and investment in non-traded capital must be financed by domestic savings. It implies that the capital mobility is partial rather than perfect although domestic residents have free access to the world capital market. By incorporating externalities into the production technology, the model economy is able to generate dynamic path of equilibrium time series solely driven by non-fundamental shocks such as animal spirits of investors or self-fulfilling expectations if the ratio of traded capital to total capital is sufficiently high. The paper shows that the second moment properties of the Korean aggregate data could be reproduced in a modified real business cycle framework where fluctuations are driven only by non-fundamental shocks, not by the disturbances to economic fundamentals such as technology. This requires a high value of traded capital relative to total capital, which means that the domestic capital market must be highly integrated with the world capital market. It implies that there exists some critical level of capital mobility beyond which the business cycles of an open economy becomes highly vulnerable to non-fundamental shocks such as self-fulfilling expectations.