Guo, Jang-Ting; Sirbu, Anca-Ioana; Weder, Mark - Department of Economics, College of Business and Economics - 2012
We show that an otherwise standard one-sector real business cycle model with variable capital utilization and mild increasing returns-to-scale is able to generate qualitatively as well as quantitatively realistic aggregate fluctuations driven by news shocks to future consumption demand. In sharp...