The Real Business Cycle (RBC) research program has grown spectacularly over the last decade, as its concepts and methods have diffused into mainstream macroeconomics. Yet, there is increasing skepticism that technology shocks are a major source o f business fluctuations. This chapter exposits the basic RBC model and shows that it requires large technology shocks to produce realistic business cy...

This paper quantitatively investigates the role of technology shocks in propagating business cycles in a neoclassical growth model. I use the new technique of business cycle accounting (BCA) which enables me to maintain the basic framework of a standard growth model, but allows multiple propagation channels (referred to as wedges), technology ‡uctuations being one of them. My test case is Japan...

The research led by Gali (AER 1999) and Basu et al. (AER 2006) raises two important questions regarding the validity of the RBC theory: (i) How important are technology shocks in explaining the business cycle? (ii) Do impulse responses to technology shocks found in the data reject the assumption of ‡exible prices? This paper argues that the conditional impulse responses of the U.S. economy to t...

The existence of stationary Markov perfect equilibria in stochastic games is shown under a general condition called “(decomposable) coarser transition kernels”. This result covers various earlier existence results on correlated equilibria, noisy stochastic games, stochastic games with finite actions and stateindependent transitions, and stochastic games with mixtures of constant transition kern...

This paper examines the role of external shocks in explaining macroeconomic fluctuations in African countries. We construct a quantitative, stochastic, dynamic, multi-sector equilibrium model of a small open economy calibrated to represent a "typical" African economy. In our framework, external shocks consist of trade shocks, modeled as fluctuations in the prices of exported primary commodities...

Applying Johansen cointegration test to U.S. annual data constructed from the EU KLEMS database, the paper documents that the productivities of consumption-goods and equipmentgoods sector are cointegrated. It confirms further, using the non-linear cointegration test framework developed by Kapetanios et al. (2006), that the cointegrating relation is non-linear. The cointegration of sectoral prod...

The literature has empirically shown that the labor wedge worsens during recessions. Taking this statement into consideration, study poses two questions: First, what is main driving force of wedge, and second, driver same as business cycles? In study, we employ a commonly used medium-scale dynamic stochastic general equilibrium model with nominal real frictions to analyze which structural shock...

Using Hassett’s isomorphism between the Noether-Lefschetz moduli space C26 of special cubic fourfolds X ⊂ P of discriminant 26 and the moduli space F14 of polarized K3 surfaces of genus 14, we use the family of 3-nodal scrolls of degree seven in X to show that the universal K3 surface over F14 is rational.