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Topic: Real business cycle

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Rational expectations

Business cycle

John Muth

New classical economics

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Keynesian economics

Macroeconomics

Money

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	Business cycle - Wikipedia, the free encyclopedia
		In the cycles before World War II or that of the late 1990s in the United States, the growth periods usually ended with the failure of speculative investments built on a bubble of confidence that bursts or deflates.
		Cycles between 1945 and the 1990s in the United States were generally more restrained and followed political factors, such as fiscal policy and monetary policy.
		Business cycle theory has been most effective in microeconomics where it aids in the preparation of risk management scenarios and timing investment, especially in infrastructural capital that must pay for itself over a long period, and which must fund itself by cashflow in late years.
	en.wikipedia.org /wiki/Business_cycle (1583 words)

	Real business cycle - Wikipedia, the free encyclopedia
		The model of Real Business Cycles (RBCs) is a macroeconomics model formulated principally by Robert Lucas Jr, Finn E. Kydland and Edward C. Prescott, building upon the ideas of John F. Muth.
		Therefore, the main conclusion of this model is that business cycles are entirely consistent with the efficient workings of a market economy; the movements of the economy are always Pareto efficient.
		Real business cycle theory also suffers from conclusions which most observers find unrealistic; denying the existence of involuntary unemployment and imposing neutrality of money, even in the short run.
	en.wikipedia.org /wiki/Real_business_cycle (455 words)

	QUESTIONS AND ANSWERS - The business cycle; Barry Harrison
		Real business cycle theorists, on the other hand, emphasise the importance of supply-side factors as the cause of fluctuations in economic activity.
		However, real business cycle theorists, with their roots in classical economics, argue that causation is from supply to demand, rather than from demand to supply.
		Real business cycle theorists doubt these assertions and argue that business fluctuations are a natural part of an economy's evolution.
	dspace.dial.pipex.com /prod/dialspace/town/green/ac777/bes/bes_autumn1999/qa.htm (1595 words)

	Federal Reserve Bank of Minneapolis - The Region - Real Business Cycles: A Legacy of Countercyclical Policies (March ... (Site not responding. Last check: 2007-10-29)
		Business cycles have troubled market-oriented economies since the dawn of the industrial age.
		In his 1992 book on business cycles, Victor Zarnowitz records that a financial crisis occurred during the contractionary phase of four out of the 15 business cycles between 1870 and 1927, and two financial crises occurred during the contractionary phase of the business cycle that began in November 1927 and ended in March 1933.
		The theory suggests that policy initiatives to buffer the effects of business cycles may not be necessary; postwar business cycles are close to what we would ideally expect as a result of random fluctuations in the growth rate of business-sector productivity.
	woodrow.mpls.frb.fed.us /pubs/region/99-03/cycles.cfm (4389 words)

	Business Economics: A primer on real business cycles or the ABCs of RBCs - real business cycle
		Business Economics: A primer on real business cycles or the ABCs of RBCs - real business cycle
		Recent research in business cycle theory has concentrated on real rather than monetary factors as the primary cause in explaining fluctuations in economic activity.
		This article discusses the evolution of real business cycle theory, presents in nonmathematical terms the basic model and several extensions, and the policy conclusions that result from these models.
	www.findarticles.com /p/articles/mi_m1094/is_n3_v25/ai_8876128 (1457 words)

	business cycle information (Site not responding. Last check: 2007-10-29)
		Business Cycle Expansion and contraction dates for the United States Economy...
		With the great assistance of reality TV make-over shows the DIY and gardening world is having the best sales cycle of their entire lifespan.
		It has never been easier to turn that yard, that balcony or that deck into another room – quite literally an outdoor space that is part of the house and not just an area that one sits in during summer.
	property-raider.com /articles/9/business-cycle.html (497 words)

	RBC
		Haberler defined the business cycle in the general sense as “an alternation of periods of prosperity and depression, of good and bad trade.” This paper is a presentation of the New Classical theory with regard to its explanation of the fluctuations in the business cycle.
		This political business cycle is successfully utilized by the government, since the public has a short memory and will not recognize the use of this policy during the next election (five years later).
		Lucas did not agree with Kydland and Prescott on the exclusive focus of their model on the real as opposed to the monetary elements in explaining the economic fluctuations, and he suggested a ‘hybrid’ model, where attention is equally given to real and monetary phenomena.
	k.faculty.umkc.edu /kaboubf/WP/RBC.html (1889 words)

	Real Business Cycles - More Information
		Real business cycle theory has long been recognized as 'important' but at the same time it has aroused 'significant' opposition and controversy.
		The introduction provides a richly detailed survey of the state of the real business cycle controversy, and shows how the articles in the volume relate to one another, what issues they address and to what degree those issues are resolved or open to continued debate.
		This is the first time a balanced assessment of real business cycle theory has been presented in one volume.
	www.ebookstore.tandf.co.uk /html/moreinfo.asp?etailerid=19&bookId=536879174 (196 words)

	In This Issue (Site not responding. Last check: 2007-10-29)
		Real business cycle models usually are fitted to the data by calibration, a process in which key parameters are assigned values based on observations not directly related to business cycles, such as individual behavioral responses, taken from panel studies or production input shares taken from average growth relationships.
		Manuelli points out that the theory of real business cycles and the method of confronting real business cycle models with the data are quite separate; one can be bought without the other.
		He argues that Prescott’s type of real business cycle model is not relevant to the business cycles actually observed.
	woodrow.mpls.frb.fed.us /Research/qr/it104.html (521 words)

	Approximating and Simulating the Real Business Cycle: (Site not responding. Last check: 2007-10-29)
		This paper compares three approximation methods for solving and simulating real business cycle models: linear quadratic (including log-linear quadratic) methods, the method of parameterized expectations, and the genetic algorithm.
		This paper is inspired by the recent work of Den Haan and Marcet (1994), who compared the accuracy of the LQ, log LQ and PE methods for the real growth model analyzed by Taylor and Uhlig (1990) and for the real business cycle model with money due to Cooley and Hansen (1989).
		Business cycle research with nonlinear stochastic dynamic models is an enterprise which is becoming more and more computationally intensive.
	econwpa.wustl.edu:8089 /eps/mac/papers/9706/9706001.html (2211 words)

	Lecture notes on Real Business Cycle Modeling
		In these notes (a) I specify a relatively simple RBC model, (b) I report its 'solution', (c) I discuss what it implies for macroeconomic behaviour, and (d) I report what RBC theorists do to 'test' their theory against reality.
		The claims of RBC modelers are not that they can replicate time series paths that mimic the actual clockwise cycles we see in inflation and unemployment.
		However, the RBC approach of deriving macroeconomic behaviour from the rational optimizing behaviour of micro agents, in fully specified microeconomic contexts, is one that has caught on with many macroeconomists who do not also adopt the approach of assuming prices to be always flexible.
	www.umanitoba.ca /faculties/arts/economics/cameron/380/RBCNotes.htm (2403 words)

	Testing real business cycle models in an emerging economy (Site not responding. Last check: 2007-10-29)
		The purpose of the paper is to test the capacity of RBC models both to replicate the salient characteristics of the observed aggregate fluctuations of the economy in the period 1986—2000 and to provide insights regarding the contribution of fiscal and monetary policies to the cycle.
		The main drawback is that it neglects some of the real and financial aspects of international business cycles and their effect on the private sector.
		business cycle models are able to replicate much of the observed fluctuations of both the real and monetary sides of the economy
	www.eldis.org /static/DOC19033.htm (480 words)

	ps10
		The primary reason why labor supply fluctuates is the change in the real wage over the business cycle.
		The curve labeled real AD is just the standard IS curve, while the real AS curve depicts the positive relation between aggregate supply and the real interest rate due to the effect in question 4: a higher interest rate increases labor supply, which in turn increases the quantity of output supplied.
		Using the Real AD-Real AS framework, show the effects of a fiscal expansion (say a rise in government spending) on output and the real interest rate.
	www.yale.edu /econ116b/ps10.html (769 words)

	EconPapers: Financial Inefficiency and Real Business Cycle in Colombia
		EconPapers: Financial Inefficiency and Real Business Cycle in Colombia
		Financial Inefficiency and Real Business Cycle in Colombia
		The incidence over the cycle of shocks to average financial inefficiency and technology is analyzed, as well as the steady state welfare gain of a reduction in average financial inefficiency.
	econpapers.repec.org /paper/bdrborrec/127.htm (241 words)

	Christian Zimmermann's RBC Bibliography Online
		This bibliography, hopefully, will convince the reader that RBC has now gone far beyond the ``R'', as money and nominal effects are now routinely included in these models, as well as beyond ``BC'', as the methodology of calibration and simulation of a recursive, dynamic economy is now applied to many different topics.
		Farmer and J. Guo, "Real business cycles and the animal spirits hypothesis," Journal of Economic Theory, vol.
		Vollmer, "Theorien der "real business cycles"," Wirtschaftswissenschaftliches Studium, pp.
	ideas.repec.org /zimm/papers/rbcbib.html (11541 words)

	Indeterminacy, Aggregate Demand, and the Real Business Cycle (ResearchIndex) (Site not responding. Last check: 2007-10-29)
		9 Labor hoarding and the business cycle (context) - Burnside, Eichenbaum et al.
		3 Indivisible labour and the business cycle (context) - Hansen - 1985
		1 and the real busi- ness cycle (context) - Benhabib, Wen - 2000
	citeseer.ist.psu.edu /589067.html (498 words)

	Regime-switching Monetary Policy and Real Business Cycle Fluctuations - Federal Reserve Bank of New York
		In a Cash-in-Advance model, a regime switching monetary policy with the typical observed business cycle durations could cause sizable fluctuations in real variables such as consumption, and to a lesser extent, investment.
		It is also found that the expected durations of the monetary policy in each regime have a significant effect on the fluctuation of real variables such as consumption and investment.
		Adding monetary shock in real business cycle models helps to explain the fluctuations not only in monetary and price variables, but also in real variables.
	www.ny.frb.org /research/staff_reports/research_papers/9528.html (261 words)

	Real Business Cycles (Site not responding. Last check: 2007-10-29)
		Real Business Cycle theory argues that business cycles are the result of AS shocks.
		It has been difficult to specify what the shocks were that caused the output changes.
		The main point that of the real business cycle advocates try to make is that cycles can not be eliminated by government fiscal and monetary policy.
	www.econ.iastate.edu /classes/econ102/merrill/fall97/chap16-19/tsld032.htm (72 words)

	Business Cycle (Site not responding. Last check: 2007-10-29)
		Papers on real business cycle theory and quantitative macroeconomics.
		Our business model caters for the IT-life cycle and designs, implements and operates enterprise-wide business system solutions for medium to large clients in the Commercial and Industrial...
		Read a clear and succinct account written for the lay reader of what a business cycle is, and when it was first discovered.
	www.piedmontbike.com /business-cycle.html (197 words)

	Credit & Financial Management Review: Real business cycles: A legacy of countercyclical policies
		Real business cycles: A legacy of countercyclical policies
		In an article published in 1986, Edward Prescott forcefully argued that during the post-World War II period, business cycles in the United States mostly resulted from random changes in the growth rate of business sector productivity.
		Consequently, this article briefly describes real-- business-cycle theory, then turns to a discussion of its implications for countercyclical policies.
	www.findarticles.com /p/articles/mi_qa3857/is_199910/ai_n8867226 (1348 words)

	Real-Business Cycles
		The real-business cycle theorists say that an important cause is fluctuation in the rate of technology change.
		When there is a technological shock raising real wage, people will work more causing output to surge, and when there is a technological shock lowering real wage, people will withdraw from work, causing output to fall.
		The studies on the real business cycle do show that alternative explanations to the patterns we observe are possible and are a reminder of how little we know for certain in macroeconomics.
	ingrimayne.saintjoe.edu /econ/Connections/Real-Business.html (617 words)

	aw_abelbern_macroecon_5\|Student Resources\|Chapter 10: Classical Business Cycle Ana\|Related Links
		There's a wealth of information on new research using real business cycle models at the Quantitative Macroeconomics and Real Business Cycle Home Page.
		The most important research paper in the literature on real business cycles is probably "Theory Ahead of Business Cycle Measurement" by Ed Prescott (requires the Adobe Acrobat Reader).
		Satyajit Chatterjee discusses the historical development of business-cycle theory leading up to the RBC model, in his article "From Cycles to Shocks: Progress in Business-Cycle Theory" (requires the Adobe Acrobat Reader).
	wps.aw.com /aw_abelbern_macroecon_5/0,8751,1139616-,00.html (181 words)

	FRBB Working Papers: Are Taste and Technology Parameters Stable? A Test of “Deep” Parameter Stability in ...
		One example of the equilibrium approach is the Real Business Cycle (RBC) model.
		However, RBC models have not been subjected to the same scrutiny of tests of parameter instability.
		Thus, the “Lucas critique” is applicable and we conclude that the single representative agent class of RBC models has an invalid structural form.
	www.bos.frb.org /economic/wp/wp2001/wp015.htm (166 words)

	Money in a Real Business Cycle Model
		This paper constructs a real business cycle model in which real money balances yield utility.
		"Real business cycles and the animal spirits hypothesis in a CIA economy," CEPREMAP Working Papers (Couverture Orange) 0110, CEPREMAP.
		"On the sources of business cycles in the G-7," Journal of International Economics, Elsevier, vol.
	ideas.repec.org /p/cpr/ceprdp/1630.html (605 words)

	Non-Parametric Real Business Cycle Modeling (ResearchIndex) (Site not responding. Last check: 2007-10-29)
		Abstract: In this paper we oer a non-parametric alternative to the standard gaussian assumption in the real business cycle (RBC) literature.
		We take a standard RBC model and compare the outcomes of the model under the gaussian assumption and the nonparametric alternative.
		Compared to the gaussian approach, the non-parametric approach leads to a slight increase in the variance of the macroeconomic variables.
	citeseer.ist.psu.edu /428703.html (249 words)

	Business Economics - The Business Cycle (Site not responding. Last check: 2007-10-29)
		Investment also plays a key role in the business cycle, sometimes known as the "trade cycle", the pattern of fluctuations around the trend.
		Other indicators (the so-called "counter-cyclical" indicators) fall in periods of economic expansion, such as unemployment and the number of bankruptcies.
		This is an excellent introduction to the theory and practice of business cycles.
	www.bized.ac.uk /fme/2-9.htm (287 words)

	Financial Inefficiency and Real Business Cycle in Colombia
		In a dynamic, stochastic, general equilibrium model, we explore the optimal response of the inhabitants of a closed economy to an inefficient ad hoc financial system that in its intermediation duty looses a fraction of agrégate savings which otherwise would become agrégate investment.
		The incidente over the cycle of shocks to average financial inefficiency and technology is analyzed, as well as the steady state welfare gain of a reduction in average financial inefficiency.
		The descriptive power of the model is assessed with Colombian data between 1970 and 1992.
	www.banrep.gov.co /docum/borrasem/intro127.htm (205 words)

	EconPapers: Foreign Aid and the Business Cycle
		Abstract: We document the real business cycle properties of foreign aid to poor countries.
		In contrast, there is no clear pattern of procyclicality with the business cycle of the donors.
		En ce qui concerne le cycle économique du donneur, la même procyclicalité de l'aide n'est pas observée.
	econpapers.repec.org /paper/crecrefwp/63.htm (374 words)

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