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### Proof of the Lucas' Cost of Business Cycles

I am trying to derive the parameter used by Lucas to measure the cost of business cycles, namely: derived in the paper "Macroeconomic Priorities". I already searched in several papers but I ...
26 views

### Should business cycles be included in a growth accounting exercise that is focused on the long run?

I have been tasked with a long-run analysis of the Japanese and Brazilian economies, and as part of this, I have decomposed GDP growth into the contributions from capital, labour and TFP (following ...
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83 views

### How do economists compute new hires by demographic group?

For the U.S., is there any known way to compute say, annual, new hires (not the hiring rate) by demographic group, e.g. men, women, aged 50 and over, etc? What data sources are used for this?
129 views

### Debt cycle theory of Ray Dalio

I recently started reading Ray Dalio's book regarding BIG DEBT CRISES. He compared there, economy to the monopoly board game. There is something I don't quite follow in this analogy. If you ...
1 vote
35 views

### What does it mean to detrend a time series at a given rate?

What does it mean to detrend a time series at a given rate, say, 1.5%? What is the formula here? $X_t - trend$? where trend = average growth rate? Say $X_t - 0.015$?
1 vote
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### Is Hodrick-Prescott filter optimal with irregular component?

I need to extract cyclical component from time series, when doing seasonal adjustment I have the option to remove, apart from seasonal component, the irregular component. Then I'll apply HP to the ...
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This video on the Austrian business cycle seems to state that when rates are low this signlas to investors that there is plenty of money to borrow and plenty of resourses to deploy. However I dont ...
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### Are business cycle fluctuations usually studied in a (New Keynesian) DSGE model, or can they also be studied in a growth model?

I wonder if business cycle fluctuations are usually studied in a (New Keynesian) DSGE model, or can they also be studied in a growth model?
1 vote
29 views

65 views

### Why does global suspension of economic activity result in catastrophic loss/debt?

Covid-19 has forced a suspension of at least 50% of financial transactions and business activities. Materially, not much has been lost: consumables have been spared, equipment is dormant, ...
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1 vote
2k views

### Am I correct that cyclical unemployment can be negative?

Let's start with stating and emphasizing some truths that we will need later. Overall unemployment rate=Frictional unemployment + Structural unemployment + Cyclical unemployment. Also, Natural rate of ...
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1 vote
108 views

### Model of economic cycles consistent with efficient market hypothesis

I do not have background in economics, so my question may be naive or I might have taken incorrect assumptions somewhere. As far as I understand, efficient market hypothesis applies, saying that the ...
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1 vote
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### extensive vs intensive labor in US in recent decades

Total Hours worked is a mix of extensive (to work or not, the usual standard working week) and intensive (how many hours to work). I'm interested in how this balance of extensive and intensive ...
154 views

### Can the coming recession - or any recession - be avoided?

I keep reading about all these warning signs of a coming recession, and I have a very silly question: If we can see it coming, why can't we do something about it now, instead of after we are deep in ...
81 views

### On a Dalio youtube video

The following video https://www.youtube.com/watch?v=PHe0bXAIuk0 argues that credit is the principal force behind the business cycle. Is this considered to be a established truth within some school ...
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1 vote
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### Inflation leads to loss of gold reserves

I am reading Murray's Rothbard "What has government done to our money?" and this is his reasoning for inflation leading to loss of gold reserves to other countries (assuming everyone is on ...
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1 vote
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### Empirical research into sectoral comovement

I'm looking for some empirical studies into sectoral comovement. In particular, I'm interested in how manufacturing and services industries move together both in the long run and over the course of a ...
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1 vote
30 views

### Question Regarding 'Potential Output'

I am learning about potential output. We have been told that it is the amount of output that an economy can produce when using its resources, such as capital and labour, at normal rates/maximum ...
• 111
1 vote
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### Why are real interest rates so non-volatile compared to investment?

Intuitively I would guess that real interest rates are highly related to investment. But there is a very low interest rate volatility, compared to investment: log investment is about 20 times more ...
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1k views

### Understanding the HP Filter

The HP Filter has two objectives, with the importance of each objective denoted by the user given value of lambda: Objective 1: minimize the $\tau_t$ in the term in the square brackets such that we ...
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377 views

### Using metrics provided by FRED to identify the business cycle

I am interested to see how the "business cycle" is associated with our firms sales. The hope is that if we can show that our sales line up with the business cycle then we can make decisions ...
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150 views

### Kiyotaki-Moore v.s. Bernanke-Gertler-Gilchrist - what's the difference?

What are the key differences between (i) a model which features a "Kiyotaki-Moore collateral constraint"; and (ii) a model which incorporates a "financial accelerator" (a la Bernanke-Gertler-Gilchrist)...
1 vote
3k views

### What are the assumptions of real business cycle theory and Keynesian theory?

What are the differences between the approaches of Keynes and Real Business Cycle theorists? What are the assumptions made by both the theories? How do they differ in their methodology? Do they ...
79 views

### Causality: Money supply and prices

When there is an increase in price level, real money supply decreases and raises interest rates. In a similar situation, when money supply decreases, interest rates increases, consumption decreases, ...
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### No Ponzi game condition and transversality condition are the same?

Given the following non-stochastic planning problem with finite horizon, \begin{align} &\max_{\{k_{t+1}\}}\sum^T_{t=0}\beta^tU[f(k_t-k_{t+1})] \\ \text{s.t. } & 0\leq k_{t+1}\leq f(k_t)\\ &...
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23 views

### Are there times when firms compete more with each other?

I have the impression that sometimes firms are fiercely competing with each other, innovating and trying to gain market share and other times when firms are just hanging on. Are there any references ...
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588 views

### Lucas Cost of Business Cycles

I am trying to understand the logic behind Lucas attempting to analyse the potential benefits of eliminating business cycles by attempting to calculate the percentage of income that individuals would ...
1 vote
54 views

### Is there a change over the business cycle in how much of economic activity is market-based?

Out of the total production in an economy, a big part is market-based, as when you make something and sell it. But a big part is not, as when you make something and don't sell it, but exchange it or ...
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91 views

### What fraction of new businesses die out within a year?

Is there a simple way to figure out how many new businesses appear and disappear each year in the US economy? It seems a key question to figure out how the economy is changing over time, although I ...
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401 views

### Is the basic RBC model a weak model?

There are a plethora of examples of weaknesses in my textbook, such as: The Walrasian assumption Not including nominal shocks Not including indivisible labour Not including distortionary taxes Not ...
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1 vote
57 views

### Lack of historical data for calibration of probability of default

It is a known fact that default rates seem to exhibit cyclic behavior. Most probability of default models use one-year averages of default rates to calibrate the models. The one-year averages should ...
1 vote
6k views

### The period of the business cycle in which the real GDP is increasing is called the?

The period of the business cycle in which the real GDP is increasing is called the? And no, this is not an homework question. I'm a college student and we starting our exams soon. I'm just going ...
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42 views

### Amazon's 1-Click Check Out : any feedback? [closed]

Does anyone have feedbacks or analysis on Amazon's 1-Click Check Out ? Any numbers about the conversion rates (before/after using the 1-click checkout button) , etc. ? This page is about a \$300 ...
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116 views

### Who first formulated the Political Business Cycle Theory?

The first time I saw it, was in Stephen Harper's Master's Thesis http://dspace.ucalgary.ca/bitstream/1880/24345/1/1991_Harper.pdf It comes across as being very similar to the Austrian Business Cycle ...
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I was looking through my textbook on Money, Banking, and the Economy and I came to the chart of the hypothetical short-term business cycle deviating around an upward sloping long-term cycle trend. My ...
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### Separation shock and business cycles

In the context of the Diamonds-Mortensen-Pissarides models, there was a reasoning why a separation shock cannot fit business cycles. I think it was brought forward by Shimer, but I could be wrong. ...
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132 views

### Overview: Crises and their causes

There have been many business cycles in the US over the past 50 years (although less so since the great moderation). Many of us youngsters are too young to remember many of these. Is there some ...
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1k views

Basically I need to replicate Hartley's 'A User's Guide to Solving Real Business Cycle Models' (http://www.econ.ucdavis.edu/faculty/kdsalyer/LECTURES/Ecn235a/Linearization/ugfinal.pdf). Specifically, ...
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### Firm Sizes over the business cycle

There has been a lot of evidence about the firm size distribution (as measured in employment) being Pareto (see for example Luttmer 2007), but what are the properties of this distribution over the ...
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554 views

### Are profits procyclical?

This is somewhat related, but distinct from Cyclicality of Markups Basically, I'm looking for papers on whether firms profits are (on average) procyclical or not, and I appreciate theoretical, but ...
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288 views

### Is the S&P 500 now in a boom-bust cycle?

This question was originally posted at money.stackexchange but was moved here per a commentor's suggestion after the question was put on hold for being opinion-based. The original question was: ...
138 views

### Does RBC models pin down equilibrium output, amount of labor and capital without initial condition?

In ordinary equilibrium models, we can pin down equilibrium quantity by supply-demand functions. Is this the same in RBC models? Can we pin down equilibrium output and amount of labor and capital ...
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201 views

### Credit Frictions as the source of Business Cycles

Many papers look at the impact of credit frictions onto business cycles, and they almost unambiguously find that credit frictions work as an amplification mechanism of other shocks. For example, ...
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