ISBN:
9780444501578
Content:
The Real Business Cycle (RBC) research program has grown specularly over the last decade, as its concepts and methods have diffused into mainstream macroeconomics. Yet, there is increasing skepticism that technology shocks are a major source of business fluctuations. This chapter exposits the basic RBC model and shows that it requires large technology shocks to produce realistic business cycles. While Solow residuals are sufficiently volatile, these imply frequent technological regress. Productivity studies permitting unobserved factor variation find much smaller technology shocks, suggesting the imminent demise of real business cycles. However, we show that greater factor variation also dramatically amplifies shocks: a RBC model with varying capital utilization yields realistic business cycles from small, nonnegative changes in technology.
In:
Handbook of macroeconomics, Amsterdam [u.a.] : Elsevier, 1999, (1999), Seite 927-1007, 9780444501578
In:
0444501568
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0444501584
In:
9780444501561
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9780444501585
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year:1999
In:
pages:927-1007
Language:
English
DOI:
10.1016/S1574-0048(99)10022-3
URL:
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