A modelling framework is proposed in which the real time informational context of decision-making is properly reflected. Comparisons are drawn with ‘standard’ estimated models that incorrectly omit market-informed insights on future macroeconomic conditions and inappropriately incorporate information that was not available at the time. An analysis of quarterly US data 1968q4-2006q1 shows that n...

This paper deals with the existence of a common European growth cycle and its identification. Based on the analysis of some descriptive statistics in the time and frequency domain there is clear evidence of comovement in output growth among European countries. Univariate Markov switching autoregressions (MS-AR) are used for individual countries in order to detect changes in the mean growth rate...

We develop a tractable dynamic general equilibrium model with a continuum of different industries, each comprising a finite number of strategic price-setting firms. Each industry coordinates on profit-maximizing markups taking as given the strategic behavior of all other industries. The strategic behavior of all firms jointly determines the level of aggregate consumption in each state, which in...

The mechanisms governing the relationship of money, prices and interest rates to the business cycle are the most studied and most disputed topics in macroeconomics. In this paper, we first document key empirical aspects of this relationship. We then ask how well three benchmark rational expectations macroeconomic models-a real business cycle model, a sticky price model and a liquidity effect mo...

This paper proposes a simple method for guiding researchers in developing quantitative models of economic fluctuations. We show that a large class of models, including models with various frictions, are equivalent to a prototype growth model with time varying wedges that, at least on face value, look like time-varying productivity, labor taxes, and capital income taxes. We label the time varyin...

This paper attempts to simulate endogenous cyclical behaviour through variations on the standard real business models. This paper relaxes the perfect foresight assumption implied by the rational agent hypothesis. It is replaced by imperfect adaptive expectations. The model is extended with a delay between investment and capital accumulation. This paper also simulates a non-equilibrium timediffe...

Abstract The COVID-19 pandemic has affected economic activity worldwide. Despite the progress made by vaccination campaigns, important uncertainties still linger amid persistent global value chains disruptions and ongoing energy crisis. A proper understanding of behavior economy is therefore essential for future policy decisions. While there are plenty studies regarding business cycles, using v...

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