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A growing recent literature relies on a precautionary pricing motive embedded in representative agent DSGE models with sticky prices and wages to generate negative output effects of uncertainty shocks. We assess whether this theoretical model channel is consistent with the data. Building a New...
Persistent link: https://www.econbiz.de/10012962916
The argument that policy risk, i.e., uncertainty about monetary and fiscal policy, has been holding back the economic recovery in the U.S. during the Great Recession has a large popular appeal. We analyze the role of policy risk in explaining business cycle fluctuations by using an estimated New...
Persistent link: https://www.econbiz.de/10009772961
This paper analyzes the contribution of anticipated capital and labor tax shocks to business cycle volatility in an estimated New Keynesian DSGE model. While fiscal policy accounts for 12 to 20 percent of output variance at business cycle frequencies, the anticipated component hardly matters for...
Persistent link: https://www.econbiz.de/10009748254
Persistent link: https://www.econbiz.de/10010348116
Jesús Fernández-Villaverde, Pablo A. Guerrón-Quintana, Juan F. Rubio-Ramírez and Martín Uribe (2011) find that risk shocks are an important factor in explaining emerging market business cycles. We show that their model needs to be recalibrated because it underpredicts the targeted business...
Persistent link: https://www.econbiz.de/10010354846
Persistent link: https://www.econbiz.de/10008935045
Persistent link: https://www.econbiz.de/10011619098
Persistent link: https://www.econbiz.de/10011571341
A growing recent literature relies on a precautionary pricing motive embedded in representative agent DSGE models with sticky prices and wages to generate negative output effects of uncertainty shocks. We assess whether this theoretical model channel is consistent with the data. Building a New...
Persistent link: https://www.econbiz.de/10011597159
Persistent link: https://www.econbiz.de/10011290220