Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5099354 | Journal of Economic Dynamics and Control | 2007 | 23 Pages |
Abstract
This paper explores the possibility that economic fluctuations may be largely demand-driven. It is shown that the stylized open-economy business cycle regularities documented by Feldstein and Horioka [1980. The Economic Journal 90 (June), 314-329] and Backus et al., [1992. Journal of Political Economy 100 (4), 745-775] can be explained by demand shocks alone even in a standard general equilibrium model. Frictions such as market incompleteness, increasing returns to scale, and sticky prices do not appear to be the preconditions for resolving these long-standing puzzles.
Related Topics
Physical Sciences and Engineering
Mathematics
Control and Optimization
Authors
Yi Wen,