scholarly journals Are labor unions important for business cycle fluctuations? Lessons from Bulgaria

2019 ◽  
Vol 10 (1) ◽  
pp. 143-161 ◽  
Author(s):  
Aleksandar Vasilev
Keyword(s):  
Business Cycle ◽  
Labor Markets ◽  
Propagation Mechanism ◽  
Government Sector ◽  
Sequential Bargaining ◽  
Business Cycle Model ◽  
Bargaining Procedure ◽  
Compare And Contrast ◽  
Monopoly Union ◽  
Better Than

Abstract In this paper, we investigate the quantitative importance of collective bargaining agreements for the observed fluctuations in Bulgarian labor markets. Following Maffezzoli (Rev Econ Dyn 4:860–892, 2001), we introduce a monopoly union into a real-business-cycle model with government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999–2018), and compare and contrast it to a model without unions. We find that the sequential bargaining procedure between the monopoly union and the stand-in firm produces an important internal propagation mechanism within the theoretical setup, which allows the monopoly model to fit data better than the alternative framework with perfectly-competitive labor markets.

scholarly journals A Search-Theoretic Monetary Business Cycle Model with Capital Formation

2006 ◽  
Vol 6 (1) ◽  
pp. 1-36 ◽  
Author(s):  
Martin Menner
Keyword(s):  
Business Cycle ◽  
Adjustment Costs ◽  
Capital Formation ◽  
Propagation Mechanism ◽  
Monetary Model ◽  
Search Intensity ◽  
Capital Adjustment ◽  
Inventory Investment ◽  
Business Cycle Model ◽  
Divisible Goods

Search-theory has become the main paradigm for the micro-foundation of money. But no comprehensive business cycle analysis has been undertaken yet with a search-based monetary model. This paper extends the model with divisible goods and divisible money of Shi (JET, 1998) to allow for capital formation, analyses the monetary propagation mechanism and contrasts the model's implications with US business cycle stylized facts. The propagation mechanism based on a feedback between increased search intensity and depleted inventories only survives in the presence of non-negligible capital adjustment costs. With intermediate adjustment costs the model is able to replicate fairly well the volatility and cross-correlation with output of key US time series, including sales and inventory investment.

scholarly journals A Real-Business-Cycle Model with Institutional Quality: The Case of Bulgaria (1999–2018)

2021 ◽  
Vol 72 (1) ◽  
pp. 51-69
Author(s):  
Aleksandar Vasilev
Keyword(s):  
Business Cycle ◽  
European Commission ◽  
Institutional Quality ◽  
Test Case ◽  
Real Business Cycle ◽  
Washington Dc ◽  
Working Paper ◽  
Government Sector ◽  
Business Cycle Model ◽  
Corrupt Behavior

Abstract This paper takes an otherwise standard real-business-cycle (RBC) setup with government sector, and augments it with an output-expropriation mechanism and shocks to institutional quality in order to study business cycle fluctuations. The extraction decision is endogenous: households can use their time either productively, or engage in opportunistic activities. Stronger institutions decrease the size of the available resources for capture, and suppress corrupt behavior. As a test case, the model is calibrated to Bulgaria after the introduction of the currency board (1999–2018). Overall, the shocks to institutional quality generate business cycles of the same magnitude as in data, which suggests that political economy factors might be the major driving force behind the observed economic fluctuations in Bulgaria. Another interesting result, generated by the model, is that on average, the estimated size of evaded resources is approximately one-fourth of output, which is very close to the estimates of the unofficial economy share, e.g. European Commission (2014). Special eurobarometer 402: undeclared work. European Commission, Brussels and Medina, L. and Schneider, F. (2017). Shadow economies around the world: what did we learn over the last 20 Years? IMF Working Paper WP/18/17. International Monetary Fund, Washington DC.

scholarly journals A Real-business-cycle Model with a Stochastic Capital Share: Lessons for Bulgaria (1999–2018)

2020 ◽  
Vol 14 (1) ◽  
pp. 107-121
Author(s):  
Aleksandar Vasilev
Keyword(s):  
Business Cycle ◽  
Jel Classification ◽  
Real Business Cycle ◽  
Capital Share ◽  
Government Sector ◽  
Cyclical Fluctuations ◽  
Business Cycle Model ◽  
The Cost ◽  
Real Business Cycle Model ◽  
Quantitative Importance

We allow for a stochastic capital share into a real-business-cycle setup with a government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999–2018). We investigate the quantitative importance of the variability in capital share for cyclical fluctuations in Bulgaria. In particular, allowing for a stochastic capital share in the model increases variability of investment and employment, at the cost of decreasing the volatility of wages, and causing employment to become countercyclical. JEL Classification: E24, E32

LIQUIDITY CONSTRAINTS, HETEROGENEOUS HOUSEHOLDS AND SUNSPOT FLUCTUATIONS

2006 ◽  
Vol 10 (4) ◽  
pp. 529-544 ◽  
Author(s):  
JEAN-PAUL BARINCI ◽  
ARNAUD CHÉRON ◽  
FRANCOIS LANGOT
Keyword(s):  
Business Cycle ◽  
Liquidity Constraints ◽  
Returns To Scale ◽  
Propagation Mechanism ◽  
Aggregate Consumption ◽  
Model Driven ◽  
Business Cycle Model ◽  
The Business Cycle ◽  
Constant Returns To Scale ◽  
Endogenous Labor

This paper is concerned with the empirical relevance of indeterminacy and sunspots in explaining the business cycle. It argues that financial constraints provide a propagation mechanism able to generate business cycle facts observed in data in response to sunspot shocks. This point is demonstrated using an equilibrium business cycle model featuring heterogeneous households, endogenous labor supply and liquidity constraints. We first show that the model exhibits indeterminacy for roughly constant returns to scale. We then establish that our model accounts for stylized facts that neither the standard RBC model nor previous sunspots models have been able to capture. More specifically, the model driven purely by sunspots matches the procyclical movements in aggregate consumption, and the positively correlated forecastable changes of basic macroeconomic variables.

scholarly journals The Role of Energy in a Real Business Cycle Model with an Endogenous Capital Utilization Rate in a Government Sector: Lessons from Bulgaria (1999–2016)

2019 ◽  
Vol 5 (52) ◽  
pp. 130-141
Author(s):  
Aleksandar Vasilev
Keyword(s):  
Business Cycle ◽  
Physical Capital ◽  
Utilization Rate ◽  
Real Business Cycle ◽  
Cycle Model ◽  
Model Framework ◽  
Capital Utilization ◽  
Government Sector ◽  
Business Cycle Model ◽  
Real Business Cycle Model

Abstract We introduce a pro-cyclical endogenous utilization rate of physical capital stock into a real business cycle model augmented with a government sector in detail. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999–2016). We investigate the quantitative importance of the endogenous depreciation rate and the capital utilization mechanism working through the use of energy for cyclical fluctuations in Bulgaria. In particular, a positive shock to energy prices in the model works like a negative technological shock. Allowing for variations in factor utilization and the presence of energy as a factor of production improves the model performance against data, and in addition this extended setup dominates the standard RBC model framework with constant depreciation and a fixed utilization rate of physical capital (e.g., Vasilev (2009)).

scholarly journals A business-cycle model with a modified cash-in-advance feature, government sector and one-period nominal wage contracts: the case of Bulgaria

2020 ◽  
Vol 6 (1) ◽  
pp. 19
Author(s):  
Aleksandar Vasilev
Keyword(s):  
Business Cycle ◽  
Nominal Wage ◽  
Cycle Model ◽  
Government Sector ◽  
Wage Contracts ◽  
Business Cycle Model ◽  
Cash In Advance

A business-cycle model with a modified cash-in-advance feature, government sector and one-period nominal wage contracts: the case of Bulgaria

SEASONALITY, PRODUCTIVITY SHOCKS, AND SECTORAL COMOVEMENTS IN A REAL BUSINESS CYCLE MODEL FOR ITALY

2002 ◽  
Vol 6 (3) ◽  
pp. 337-356 ◽  
Author(s):  
Gianluca Cubadda ◽  
Giovanni Savio ◽  
Roberto Zelli
Keyword(s):  
Business Cycle ◽  
Propagation Mechanism ◽  
Real Business Cycle ◽  
Cycle Model ◽  
Productivity Shocks ◽  
Multivariate Technique ◽  
Stochastic Trends ◽  
Long Run ◽  
Business Cycle Model ◽  
Real Business Cycle Model

This paper investigates the degree of comovements in quarterly Italian time series of sectoral output. A recently developed multivariate technique for the empirical analysis of long-run, cyclical and seasonal comovements is used in the context of a multisectoral real-business-cycle model augmented with persistent seasonal shocks in productivity. Our empirical results emphasize the role of input–output relations in the propagation mechanism and indicate that sectoral outputs have a relatively low number of common stochastic trends, in conflict with the hypothesis of independent productivity shocks. In contrast, stochastic seasonals seem to move idiosyncratically. Furthermore, our findings suggest that the theoretical model should be extended to allow for deterministic seasonal shifts in preferences.

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