Countercyclical Markups and News-Driven Business Cycles

The standard one-sector real business cycle model is unable to generate expectations-driven fluctuations. The addition of countercyclical markups and modest investment adjustment costs offers an easy fix to this conundrum. The simulated model generates quantitatively realistic business cycles with news shocks accounting for over half of the variance of technology shocks.

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Year of publication:	2012-01
Authors:	Weder, Mark ; Pavlov, Oscar
Institutions:	School of Economics, University of Adelaide
Subject:	expectations-driven business cycles \| markups

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Extent:	application/pdf
Series:	School of Economics Working Papers.
Type of publication:	Book / Working Paper
Notes:	Number 2012-02 27 pages
Classification:	E32 - Business Fluctuations; Cycles
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010897248