Animal spirits, investment and unemployment: An old Keynesian view of the Great Recession

This paper develops a DSGE model with investment and capital accumulation build along demand-driven explanations of the Great Recession. Specifically, following Farmer (2013), I set forth a search framework in which households decide about consumption while firms decide about recruiting effort as well as investment. This setting closed with market clearing in good and asset markets has one less equation than unknowns. As a consequence, in order to solve such an indeterminacy, I assume that investment is driven by self-fulfilling expectations about the adjustment cost of capital. Consistently with the view of business cycles pushed by stock price fluctuations, this model has the potential to provide a more comprehensive rationale for the consumption–investment patterns observed during the years of the crisis.

ResumoO artigo apresenta um modelo DSGE com investimento e acumulação de capital para explicar a Grande Recessão pelo lado da demanda. Seguimos Farmer (2013) propondo uma estrutura de search no qual familias decidem o quanto consumir e firmas investem e recrutam mão de obra. Nesse arcabouço há uma equação a menos do que incógnitas. De maneira a resolver essa indeterminação supomos que o investimento tem expectativas auto-realizáveis sobre o custo de ajustamento do capital. Consistente com a visão de que os ciclos de negócios são influenciados pelas flutuações dos preços de ações, esse modelo tem o potencial de prover uma rationale mais compreensiva para os padrões de consumo-investimento observados durante os anos de crise.