| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 986355 | Review of Economic Dynamics | 2013 | 12 Pages |
Abstract
The standard one-sector real business cycle model is unable to generate expectations-driven fluctuations. The addition of countercyclical markups and modest investment adjustment costs offers an easy fix to this conundrum. The simulated model replicates the regular features of U.S. aggregate fluctuations.
► The real business cycle model is extended by countercyclical markups. ► News-driven fluctuations arise with markups that are within empirically plausible ranges. ► The simulated model replicates the regular features of U.S. aggregate fluctuations.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Oscar Pavlov, Mark Weder,