Show simple item record Beaudry, Paul Galizia, Dana Portier, Franck 2018-04-26T10:23:17Z 2018-04-26T10:23:17Z 2018-03
dc.description.abstract Are business cycles mainly a response to persistent exogenous shocks, or do they instead reflect a strong endogenous mechanism which produces recurrent boom-bust phenomena? In this paper we present new evidence in favour of the second interpretation and, most importantly, we highlight the set of key elements that influence our answer to this question. In particular, when adopting our most preferred estimation framework, we find support for the somewhat extreme notion that business cycles may be generated by stochastic limit cycle forces; that is, we find support for the notion that business cycles may primarily reflect an endogenous propagation mechanism buffeted only by temporary shocks. The three elements that tend to favour this type of interpretation of business cycles are: (i) slightly extending the frequency window one associates with business cycle phenomena, (ii) allowing for strategic complementarities across agents that arise due to financial frictions, and (iii) allowing for a locally unstable steady state in estimation. We document the sensitivity of our findings to each of these elements within the context of an extended New Keynesian model with real-financial linkages.
dc.description.sponsorship The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries ADEMU Working Paper Series;92
dc.rights This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
dc.title Putting the cycle back into business cycle analysis
dc.type info:eu-repo/semantics/workingPaper
dc.subject.keyword Business cycle
dc.subject.keyword Limit cycle
dc.relation.projectID info:eu-repo/grantAgreement/EC/H2020/649396
dc.rights.accessRights info:eu-repo/semantics/openAccess


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