Animal spirits, technology shocks and the business cycle

On Business Cycles and Countercyclical Policies

Economists are still trying to assess the severity of this slowdown, and this assessment has clearly become more difficult since the events of September 11. It is worth emphasizing that this article is silent about the economic implications of wars and similar cataclysms and focuses instead on the analysis of " typical " business cycles. The slowdown that began prior to September 11 had already...

Sentiment and the U.s. Business Cycle

Psychological factors are commonly believed to play a role on cyclical economic fluctuations, but they are typically omitted from state-of-the-art macroeconomic models. This paper introduces “sentiment” in a medium-scale DSGE model of the U.S. economy and tests the empirical contribution of sentiment shocks to business cycle fluctuations. The assumption of rational expectations is relaxed. The ...

The Impact of ICT Shocks on Business Cycle Some Evidence from Iran

Free entry and business cycles under the influence of animal spirits∗

We provide a business cycle model in which endogenous markup fluctuations are the main driving force. These fluctuations occur due to some form of ‘animal spirits’, impelling firms in their entry-exit decisions within each sector. By contrast to existing models of the business cycle emphasizing the role of animal spirits, we do not rely on the sink property of the equilibrium to generate indete...

Test of Real Business Cycle Theory in Iran's economy

This paper tests the importance of real shocks as sources of fluctuations in iran’s economy. For this purpose, based on the work of Boschen and Mills, a set of non-monetary variables which can affect economic growth have been selected and by using an illustrative business cycle model in which the production depends on the past and current value of real shocks, the influence 01’ these variables ...