Questions tagged [rbc]
Real Business Cycle models account for business cycle fluctuations as efficient responses to real economic exogenous changes or shocks
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25 views
In the RBC model, why is household's problem dynamic?
Why is capital assumed to be a good accumulated in the current period t but being used in t+1? I think my interpretation is wrong here. I understand that households problem is dynamic because of this ...
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1answer
34 views
Is IS-LM still used in research or we learn it just to understand basic macro?
Since i had my "Introduction to advanced macroeconomics" and discovered DSGE i've been wondering if IS-LM is used in research, i know it was used in the 80's or so, but now?
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Are typical macro DSGE (RBC or New Keynesian DSGE) models linear, non-linear, or log (linearized)?
In Carl Hommes 2015 book on Expectations, it seems he considers DSGE models (being it either RBC DSGE or New Keynesian DSGE) to be linear, or (log)linearized models, on page 3 of the introduction. He ...
4
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1answer
157 views
Consumption smoothing in RBC Model
I have the following inter temporal utility function:
$U(t)=(\frac{s(t)}{1-\sigma})(c_t/c_{t-1}^\gamma)^{(1-\sigma)} - \chi*h(t)$
where $h(t)$ is the hours worked.
I know that gamma is responsible ...
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0answers
26 views
Impact of technology shock on hours worked in basic RBC model - short and long run with logarithmic preferences
First off, I apologise if, in the following, I do not present the model adequately - I'm at an intermediate level of the study of economics. My question is at the bottom.
Anyway, consider a basic RBC ...
4
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1answer
657 views
Good paper/article on the mechanisms in RBC vs New Keynesian models
I have read technical books about the (baseline) RBC and New Keynesian models.
However, these books tend not to explain very intuitively the propagation mechanisms of shocks between the two models, ...
1
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1answer
67 views
Can we add well-being into macro model as an endogenous variable?
People talk a lot about well-being as an objective of macro policy (together with gdp growth). So if well-being is an objective, i'm wondering if we can add well-being into macro model as an ...
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2answers
766 views
Textbook on the mathematics of RBC/DSGE models?
I'm reading David Romer's Macroeconomics. However, what I don't like is that he doesn't go at all into detail about the mathematical underpinnings of RBC/DSGE models. When it comes to the central ...
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2answers
209 views
Utility function of habit formation model
In the habit formation RBC model, the utility can be given as follows:
$U(c_{t},n_{t}) = \ln(c_{t}) - \frac{\theta}{1+\upsilon} \bigg(\frac{n_{t}}{n_{t-1}^{\phi}}\bigg)^{1+\upsilon}$
When I do FOC ...
2
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1answer
115 views
Can saddle path not go through the origin in Ramsey model?
In my case, the utility function is CEIS and discrete, the production fuction is $f(k_{t})=k_{t}^\alpha$, the budget constraint is $f(k_{t})+(1-\delta)k_{t}=c_{t} + k_{t+1}$. I use Jacobian matrix and ...
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2answers
83 views
What does it mean for a technology to have a $|\rho|<1$?
Nowadays, when trying to model (log)technology $a_t$, I've seen many times the following: $a_t = \rho a_{t-1}+\epsilon$, where epsilon is given a certain probability distribution. What does it mean ...
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1answer
158 views
Guess and verify?
I am trying to understand the intuition of the guess and verify method. Please could someone furnish me with a basic and very intuitive explanation of what we are trying to achieve and how this method ...
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1answer
72 views
Depreciation vs. obsolescence in RBC and New Keynesian DSGE models
A common calibration for depreciation rates within RBC models is to assume 10% depreciation rate (based on NIPA stats, for instance). This implies a half-life of about 6.5 years. But this estimate ...
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0answers
84 views
Technological shocks and Labour supply in RBC and NK models
In the class notes of Eric Sims on RBC and New Keynesian models, in his site, we get to see several graphs with the impulse response functions (IRF) of real variables such as output, labour hours, ...
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50 views
What are the most used functional forms for utility in RBC literature, and why?
In the RBC/NK literature one has to define a functional form for the utility function of the representative household. What are the most used forms, and why are they used?
Any help would be ...
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58 views
What's an RBC BGP's feasibility?
I'm reading some note of Eric Sims on extensions to RBCs and he writes «In any balanced growth path, feasibility requires that hours do not grow». The author then explains that this is so, because if ...
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1answer
141 views
How to deal with Prescott's formulation of time to build in his original RBC model?
So I was replicating the results obtained in section 4 of Prescott's original paper, which derives optimality conditions in steady state without shock. I hope to solve the social planner's ...
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1answer
309 views
The stochastic discount factor $M_t$ in a simple RBC model
In these class notes, page 3, the author defines the stochastic discount factor as $M_t=\beta^t\frac{E_0(u'(C_{t+1}))}{u'(C_{0}))}$.
I'm trying to find the rationale behind it.
A cash flow at ...
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0answers
127 views
Find the standard deviation of a log-normal AR1-process with exponent
I am trying to replicate a RBC model with technology shock
$\log(z_{t+1})=\rho \log(z_t)+\epsilon_{t+1} \ $ with $\epsilon_t \sim$ i.i.d.$ \mathcal{N}(0,\sigma^2)$ and $0 < \rho < 1$
The ...
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0answers
1k views
Given a standard Cobb-Douglas production function, how to estimate the output elasticity of labour and capital by country?
Given a standard Cobb-Douglas production function:
$$Y_t=(A_t L_t)^{\alpha} K_t^{1-\alpha}$$
Moreover, the production function has constant returns to scale:
$$\alpha + (1-\alpha)=1$$
How to estimate ...
