FINANCIAL INTERMEDIATION AND AGGREGATE FLUCTUATIONS: A QUANTITATIVE ANALYSIS

2000 ◽  
Vol 4 (4) ◽  
pp. 423-447 ◽  
Author(s):  
Russell Cooper ◽  
João Ejarque
Keyword(s):  
Quantitative Analysis ◽  
Business Cycle ◽  
Interest Rates ◽  
Capital Stock ◽  
Convincing Evidence ◽  
Aggregate Fluctuations ◽  
Productivity Shocks ◽  
The Real ◽  
Real Shocks ◽  
The U.S

We investigate the quantitative behavior of business-cycle models in which the intermediation process acts either as a source of fluctuations or as a propagator of real shocks. In neither case do we find convincing evidence that the intermediation process is an important element of aggregate fluctuations. For an economy driven by intermediation shocks, consumption is not smoother than output, investment is negatively correlated with output, variations in the capital stock are quite large, and interest rates are procyclical. The model economy thus fails to match unconditional moments for the U.S. economy. We also structurally estimate parameters of a model economy in which intermediation and productivity shocks are present, allowing for the intermediation process to propagate the real shock. The unconditional correlations are closer to those observed only when the intermediation shock is relatively unimportant.

scholarly journals What is the Real Story for Interest Rate Volatility?

2000 ◽  
Vol 1 (1) ◽  
pp. 43-67 ◽  
Author(s):  
Andreas Hornstein ◽  
Harald Uhlig
Keyword(s):  
Interest Rate ◽  
Business Cycle ◽  
Interest Rates ◽  
Adjustment Costs ◽  
Real Business Cycle ◽  
Real Interest Rates ◽  
The Real ◽  
Time To Build ◽  
Interest Rate Volatility ◽  
Business Cycle Model

Abstract What is the source of interest rate volatility? Why do low interest rates precede business cycle booms? Most observers tend to assume that monetary policy is largely responsible for it. Indeed, a standard real business cycle model delivers rather small fluctuations in real interest rates. Here, however, we present two models of the real business cycle variety, in which the fluctuations of real rates are of similar magnitude as in the data, while simultaneously matching salient business cycle facts. The second model also replicates the cyclical behavior of real interest rates.The models build on recent work by Danthine and Donaldson, Jermann, and Boldrin, Christiano and Fisher. We assume that there are workers and capital owners. The first model posits habit formation and adjustment costs to the stock of capital. The second model assumes that it takes time to plan investment and time to build capital.

scholarly journals Oil Price And Real Exchange Rate: The Case Of India

2014 ◽  
Vol 13 (4) ◽  
pp. 809 ◽  
Author(s):  
Neetu Kaushik ◽  
Raja Nag ◽  
Kamal P. Upadhyaya
Keyword(s):  
Time Series ◽  
Exchange Rate ◽  
Interest Rates ◽  
Real Exchange Rate ◽  
Price Change ◽  
Oil Price ◽  
Series Data ◽  
The Real ◽  
Indian Rupee ◽  
The U.S

This paper studies the effect of oil price change on the real exchange rate between the Indian rupee and the U.S. dollar. For that, a model is developed which is based on a monetary model of exchange rate which incorporates the real GDP, real money balances, and the interest rates of both the home and foreign country and the real price of the crude oil. Quarterly time series data from 1996 to 2012 is used. Before estimating the model, the time series properties of the data are diagnosed in order to ensure the stationarity of the data. The data series are found to be integrated of order one and the null hypothesis of no cointegration is rejected. Therefore an error correction model is developed and estimated. The estimated results suggest that there is no detectable effect of oil price change on the real exchange rate between the Indian rupee and the U.S. dollar.

scholarly journals NEW PERSPECTIVES ON DEPRECIATION SHOCKS AS A SOURCE OF BUSINESS CYCLE FLUCTUATIONS

2013 ◽  
Vol 18 (6) ◽  
pp. 1209-1233 ◽  
Author(s):  
Francesco Furlanetto ◽  
Martin Seneca
Keyword(s):  
Business Cycle ◽  
New Keynesian ◽  
Real Business Cycle ◽  
New Keynesian Model ◽  
Aggregate Fluctuations ◽  
The Real ◽  
Business Cycle Fluctuations ◽  
Shock Process ◽  
Keynesian Model ◽  
Capital Depreciation

In this paper we study the transmission of capital depreciation shocks. The existing literature in the real business cycle tradition has concluded that these shocks are irrelevant to business cycle fluctuations. We show that they are potentially important drivers of aggregate fluctuations in a new Keynesian model. Nominal rigidities and some persistence in the shock process are the key ingredients that generate co-movement across real variables.

scholarly journals The Dynamic Behavior of the Real Exchange Rate in Sticky Price Models

2008 ◽  
Vol 98 (1) ◽  
pp. 519-533 ◽  
Author(s):  
Jón Steinsson
Keyword(s):  
Exchange Rate ◽  
Business Cycle ◽  
Exchange Rates ◽  
Real Exchange Rate ◽  
Real Exchange Rates ◽  
Cycle Model ◽  
The Real ◽  
Developed Economies ◽  
Business Cycle Model ◽  
Real Shocks

Existing empirical evidence suggests that real exchange rates exhibit hump-shaped dynamics. I show that this is a robust fact across nine large, developed economies. This fact can help explain why sticky price business cycle models have been unable to match the persistence of the real exchange rate. I show that, in response to a number of different real shocks, a two-country sticky price business cycle model yields hump-shaped dynamics for the real exchange rate. The hump-shaped dynamics generated by the model are a powerful source of endogenous persistence that allows the model to match the long half-life of the real exchange rate. (JEL F31)

The Real School Safety Problem

2016 ◽  
Author(s):  
Aaron Kupchik
Keyword(s):  
Police Officers ◽  
School Safety ◽  
Zero Tolerance ◽  
Safe Schools ◽  
Original Research ◽  
School Security ◽  
Safety Problem ◽  
The Real ◽  
K 12 ◽  
The U.S

Since the 1990s, K-12 schools across the U.S. have changed in important ways in an effort to maintain safe schools. They have added police officers, surveillance cameras, zero tolerance policies, and other equipment and personnel, while increasingly relying on suspension and other punishments. Unfortunately, we have implemented these practices based on assumptions that they will be effective at maintaining safety and helping youth, not based on evidence. The Real School Safety Problem addresses this problem in two ways. One, it provides a clear discussion of what we know and what we don’t yet know about the school security and punishment practices and their effects on students and schools. Two, it offers original research that extends what we know in important ways, showing how school security and punishment affects students, their families, their schools and their communities years into the future. Schools are indeed in crisis. But the real school safety problem is not that students are either out of control or in danger. Rather, the real school safety problem is that our efforts to maintain school safety have gone too far and in the wrong directions. As a result, we over-police and punish students in a way that hurts students, their families and their communities in broad and long-lasting ways.

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