scholarly journals INTERACTING BUSINESS CYCLE FLUCTUATIONS: A TWO-COUNTRY MODEL

2006 ◽  
Vol 51 (03) ◽  
pp. 365-394 ◽  
Author(s):  
CARL CHIARELLA ◽  
PETER FLASCHEL ◽  
HING HUNG
Keyword(s):  
Steady State ◽  
Business Cycle ◽  
Foreign Exchange ◽  
Open Economies ◽  
Wage Rigidity ◽  
Market Clearing ◽  
Feedback Mechanisms ◽  
Money Wage ◽  
The Real ◽  
Business Cycle Fluctuations

In this paper, we develop a model of business cycle fluctuations between two interacting open economies within the disequilibrium or non-market clearing paradigm. We analyze the main feedback mechanisms (Keynes, Mundell, Rose and Dornbusch) driving the dynamics and the conflict between their stabilizing and destabilizing tendencies and how these depend on certain key speeds of adjustment in the real and foreign exchange sectors. We explore numerically a variety of situations of interacting price cycles in the two countries, where the steady state is locally repelling, but where the overall dynamics are bounded in an economically meaningful domain by assuming downward money wage rigidity.

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 Are Micro and Macro Labor Supply Elasticities Consistent? A Review of Evidence on the Intensive and Extensive Margins

2011 ◽  
Vol 101 (3) ◽  
pp. 471-475 ◽  
Author(s):  
Raj Chetty ◽  
Adam Guren ◽  
Day Manoli ◽  
Andrea Weber
Keyword(s):  
Steady State ◽  
Business Cycle ◽  
Labor Supply ◽  
State Of The Art ◽  
Extensive Margin ◽  
Business Cycle Fluctuations ◽  
Extensive And Intensive Margins ◽  
Quasi Experimental ◽  
Order Of Magnitude ◽  
Cross Country

We evaluate whether state-of-the-art macro models featuring indivisible labor are consistent with modern quasi-experimental micro evidence by synthesizing evidence on both the intensive and extensive margins. We find that micro estimates are consistent with macro estimates of the steady-state (Hicksian) elasticities relevant for cross-country comparisons on both the extensive and intensive margins. However, micro estimates of intertemporal substitution (Frisch) elasticities are an order of magnitude smaller than the values needed to explain business cycle fluctuations in aggregate hours by preferences. The key puzzle to be resolved is why micro and macro estimates of the Frisch extensive margin elasticity are so different.

On the real effects of inflation in open economies: theory and empirics

2009 ◽  
Vol 39 (3) ◽  
pp. 643-673 ◽  
Author(s):  
Sushanta K. Mallick ◽  
Mohammed Mohsin
Keyword(s):  
Open Economies ◽  
The Real ◽  
Real Effects

scholarly journals News-Driven Business Cycles: Insights and Challenges

2014 ◽  
Vol 52 (4) ◽  
pp. 993-1074 ◽  
Author(s):  
Paul Beaudry ◽  
Franck Portier
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Empirical Evidence ◽  
Economic Fluctuations ◽  
Aggregate Fluctuations ◽  
Business Cycle Fluctuations ◽  
Widespread Belief ◽  
Way Of Thinking ◽  
The Many

There is a widespread belief that changes in expectations may be an important independent driver of economic fluctuations. The news view of business cycles offers a formalization of this perspective. In this paper we discuss mechanisms by which changes in agents' information, due to the arrival of news, can cause business cycle fluctuations driven by expectational change, and we review the empirical evidence aimed at evaluating their relevance. In particular, we highlight how the literature on news and business cycles offers a coherent way of thinking about aggregate fluctuations, while at the same time we emphasize the many challenges that must be addressed before a proper assessment of the role of news in business cycles can be established. (JEL D83, D84, E13, E32, O33)

Estimation of fiscal rule impact on Russian ruble equilibrium exchange rate

2021 ◽  
pp. 70-84
Author(s):  
D. A. Menshikh
Keyword(s):  
Exchange Rate ◽  
Foreign Exchange ◽  
Oil Price ◽  
Real Effective Exchange Rate ◽  
Alternative Methods ◽  
Equilibrium Exchange Rate ◽  
The Real ◽  
Equilibrium Exchange ◽  
Fiscal Rule ◽  
The Impact

This paper describes a new approach that makes it possible to assess the impact of foreign exchange interventions implemented under the fiscal rule on the Russian ruble equilibrium exchange rate. The essence of the approach is to quantify the impact of foreign exchange interventions carried out within the framework of the fiscal rule on the balance of supply and demand of foreign exchange, and to reflect this influence in macroeconomic models using the “effective” oil price indicator. The article describes in detail the calculation of this indicator. The advantage of using the “effective” oil price indicator compared to alternative methods lies in the efficiency (the ability to apply for monthly data), simplicity (the possibility of using for scenario forecasting of the exchange rate), as well as the flexibility of the method (the possibility of taking into account periods of suspension of the fiscal rule and deferred purchases). The current gap in the real effective exchange rate of Russian ruble was calculated based on the data for February 2008 — October 2019. The assessment of the contribution of the fiscal rule to the equilibrium value of the real exchange rate was about 2 pp., at the end of 2019 Russian ruble was overvalued.

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