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

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 Plant-Level Irreversible Investment and Equilibrium Business Cycles

2002 ◽  
Vol 92 (1) ◽  
pp. 181-197 ◽  
Author(s):  
Marcelo L Veracierto
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Real Business Cycle ◽  
Aggregate Fluctuations ◽  
Cycle Model ◽  
Irreversible Investment ◽  
Business Cycle Model ◽  
Plant Level ◽  
Aggregate Dynamics ◽  
Real Business Cycle Model

This paper evaluates the importance of microeconomic irreversibilities for aggregate dynamics using a real-business-cycle (RBC) model characterized by investment irreversibilities at the establishment level. The main finding is that investment irreversibilities do not play a significant role in an otherwise standard real-business-cycle model: Even though investment irreversibilities are crucial for establishment-level dynamics, aggregate fluctuations are basically the same under fully flexible or completely irreversible investment.

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