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Questions tagged [real-business-cycles]

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Consumer preferences and government spending

I am studying for an exam and I am focusing on different types of preferences and shocks and the respective responses. This problem has been causing me trouble. The representative consumer in an ...
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1answer
57 views

Real Business Cycle Theory

Which academic paper does this diagram come from? Need to know for citation purposes. Apparently its King and Rebelo (2005) but doesn't seem to be the case.
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Basic New Keynesian Model - Price and Wage Level after shock

I'm currently solving a new Keynesian model with government spending. It's the basic model version, with constant returns to scale on the only production factor work. Everything has worked out fine ...
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1answer
656 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 ...
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1answer
87 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
56 views

How can I calculate with the average of the consumption in an RBC framework?

In the following open-economy RBC model consumption level ($C_t$) is not the most important for the representative households, but the difference of the consumption level and the earlier level of the ...
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1answer
208 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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1answer
3k 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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The correlation between depreciation rate and variance of output in RBC model

I would like know the correlation between depreciation rate and variance of output in RBC model. As you know, the basic motion of capital is as follows. $$K_{t+1} = (1-\delta) K_t + I_t$$ If $\...
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1answer
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RBC model and indivisible labour

First of all, I would like to apologise for the fact that I will include a link in my question rather than a direct question, however, I have no idea how to do it in a different way. I have been ...
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1answer
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Gali and van Rens: The Vanishing Procyclicality of Labor Productivity

Let's see how questions like the following are taken here. Gali and van Rens, 2014 show that empirically, the correlation between $Y, Y/L$ has been declining over time. In fact, it only was a "real ...