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 ...

When a boom ends, the downturn is generally sharp and short. When growth resumes, the boom is more gradual. Our explanation rests on learning about productivity. When agents believe productivity is high, they work, invest, and produce more. More production generates higher precision information. When the boom ends, precise estimates of the slowdown prompt decisive reactions: Investment and labo...

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We show that in a standard, technology shock-driven one-sector real business cycle model, the stabilization effects of government fiscal policy depend crucially on how labor hours enter the household’s period utility function and the associated labor-market behavior. In particular, when the household utility is logarithmic in both consumption and leisure, income taxes are destabilizing and gove...

Recently, a number of studies have departed from the mainstream view that in order to explain economic fluctuations in emerging markets, theoretical models must take explicitly into account the role of policy and market failures. This line of research argues that business cycles in emerging countries can be explained well using a neoclassical model featuring no distortions and driven solely by ...

The empirical success of Real Business Cycle (RBC) models is often judged by their ability to explain the behavior of a multitude of real macroeconomic variables using a single exogenous shock process. This paper shows that in a model with the same basic structure as the bare bones RBC model, monetary, cost-push or preference shocks are equally successful at explaining the behavior of macroecon...