scholarly journals Real Business Cycles: A New Keynesian Perspective

1989 ◽  
Vol 3 (3) ◽  
pp. 79-90 ◽  
Author(s):  
N. Gregory Mankiw
Keyword(s):  
Business Cycle ◽  
Primary Source ◽  
New Keynesian ◽  
Economic Fluctuations ◽  
Real Business Cycle ◽  
Business Cycle Theory ◽  
Macroeconomic Policies ◽  
Real Business Cycles ◽  
The Business Cycle ◽  
Random Fluctuations

Real business cycle theory is the latest incarnation of the classical view of economic fluctuations. It assumes that there are large random fluctuations in the rate of technological change. In response to these fluctuations, individuals rationally alter their levels of labor supply and consumption. The business cycle is, according to this theory, the natural and efficient response of the economy to changes in the available production technology. In this essay, I appraise this newly revived approach to the business cycle. In my view, real business cycle theory does not provide an empirically plausible explanation of economic fluctuations. Both its reliance on large technological disturbances as the primary source of economic fluctuations and its reliance on the intertemporal substitution of leisure to explain changes in employment are fundamental weaknesses. Moreover, to the extent that it trivializes the social cost of observed fluctuations, real business cycle theory is potentially dangerous. The danger is that those who advise policymakers might attempt to use it to evaluate the effects of alternative macroeconomic policies or to conclude that macroeconomic policies are unnecessary.

scholarly journals Economic Fluctuations in Turkey in the Light of Business Cycle Theories

2012 ◽  
Author(s):  
Emine Fırat
Keyword(s):  
Business Cycle ◽  
Market Failure ◽  
Free Market ◽  
Economic Fluctuations ◽  
Past Century ◽  
Business Cycle Theory ◽  
Macroeconomic Policies ◽  
Business Cycle Model ◽  
The Business Cycle ◽  
The Right

Some economists have tried to demonstrate the cause of economic fluctuations and its solution with business cycle theories. The classical school emphasizes the efficiency of free market economy and the optimization of private economic factors. The Keynesian school believes that the causes of economic fluctuations arise from not only just the deviations from market equilibrium but also market failure on a grand scale. The debate over the source and propagation of economic fluctuations rages as fiercely today as it did in the Great Depression that began in 1929. Economic Fluctuation models investigate to answer the question of why economies go through boom and bust and why economies experience cycles of recession and recovery. In the economic literature, based on the Business Cycle Theories many different approaches have been proposed. While economists discuss the ultimate form of the right business cycle model, they must take into consideration the decisive factors of economic fluctuations in the past century. In this study, the local economic crisis occurred in Turkey in recent years are investigated in the light of Business Cycle Theory and also the effects of macroeconomic policies are evaluated on the basis of economic fluctuations models.

scholarly journals NEW PERSPECTIVES ON HENRY LUDWELL MOORE’S USE OF HARMONIC ANALYSIS

2020 ◽  
pp. 1-14
Author(s):  
Paul Turner ◽  
Justine Wood
Keyword(s):  
Business Cycle ◽  
Harmonic Analysis ◽  
Fourier Transformation ◽  
Real Business Cycle ◽  
Business Cycle Theory ◽  
Empirical Economics ◽  
History Of ◽  
Complete Failure ◽  
The Business Cycle ◽  
The Relationship

This paper reconsiders the contribution of Henry Ludwell Moore to dynamic economics through the use of harmonic analysis. We show that Moore’s analysis is innovative in its use of the Fourier transformation for the identification of cycles with different periodicities. This enables Moore to identify cycles of longer length with more precision than would be the case for the standard methodology. We are able to replicate the main features of his results and confirm the existence of a rainfall cycle with a periodicity similar to that of the business cycle (eight years). However, we find that the evidence for a longer (thirty-three-year) rainfall cycle is weaker than Moore indicates. We also argue that a central theme of Moore’s analysis—the relationship among rainfall, agricultural productivity, and the business cycle—marks an early precursor of the “real business cycle” approach. George Stigler’s (1962) dismissal of Moore’s work on cycles as “a complete failure” is therefore, in our opinion, unfair. Instead, we argue that, although his work is certainly flawed, it nevertheless deserves a place in both the history of business cycle theory and empirical economics.

scholarly journals New Perspectives on Henry Ludwell Moore’s Use of Harmonic Analysis

2021 ◽  
Author(s):  
Paul Turner ◽  
Justine Wood
Keyword(s):  
Business Cycle ◽  
Harmonic Analysis ◽  
Fourier Transformation ◽  
Real Business Cycle ◽  
Business Cycle Theory ◽  
Empirical Economics ◽  
History Of ◽  
Complete Failure ◽  
The Business Cycle ◽  
The Relationship

This paper reconsiders the contribution of Henry Ludwell Moore to dynamic economics through the use of harmonic analysis. We show that Moore’s analysis is innovative in its use of the Fourier transformation for the identification of cycles with different periodicities. This enables Moore to identify cycles of longer length with more precision than would be the case for the standard methodology. We are able to replicate the main features of his results and confirm the existence of a rainfall cycle with a periodicity similar to that of the business cycle (eight years). However, we find that the evidence for a longer (thirty-three year) rainfall cycle is weaker than Moore indicates. We also argue that a central theme of Moore’s analysis, the relationship between rainfall, agricultural productivity and the business cycle, marks an early precursor of the ‘Real Business Cycle’ approach. Stigler’s (1962) dismissal of Moore’s work on cycles as ‘a complete failure’ is therefore, in our opinion rather unfair. Instead, we argue that, although his work is certainly flawed, it nevertheless deserves a place in both the history of business cycle theory and empirical economics.

scholarly journals Asset Returns, the Business Cycle and the Labor Market

2013 ◽  
Vol 14 (3) ◽  
pp. 372-397 ◽  
Author(s):  
Burkhard Heer ◽  
Alfred Maußner
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Equity Premium ◽  
Working Hours ◽  
New Keynesian ◽  
Monetary Shocks ◽  
Productivity Shocks ◽  
New Keynesian Models ◽  
The Business Cycle ◽  
Sticky Wages

Abstract We review the labor market implications of recent real-business cycle and New Keynesian models that successfully replicate the empirical equity premium. We document the fact that all models reviewed in this article that do not feature either sticky wages or immobile labor between two production sectors as in Boldrin et al. (2001) imply a negative correlation of working hours and output that is not observed empirically. Within the class of Neo-Keynesian models, sticky prices alone are demonstrated to be less successful than rigid nominal wages with respect to the modeling of the labor market stylized facts. In addition, monetary shocks in these models are required to be much more volatile than productivity shocks to match statistics from both the asset and labor market.

REAL BUSINESS CYCLES AFTER THREE DECADES

2013 ◽  
Vol 19 (2) ◽  
pp. 425-445
Author(s):  
Sumru Altug ◽  
Warren Young
Keyword(s):  
Social Sciences ◽  
Business Cycles ◽  
Business Cycle ◽  
Panel Discussion ◽  
Real Business Cycle ◽  
Real Business Cycles ◽  
Macroeconomic Analysis ◽  
Time To Build ◽  
History Of ◽  
Recent Financial Crisis

The transcript of a panel discussion marking three decades of the real business cycle approach to macroeconomic analysis as manifested in Kydland and Prescott's “Time to Build” (Econometrica, 1982) and Long and Plosser's “Real Business Cycles” (Journal of Political Economy, 1983). The panel consists of Edward Prescott, Finn Kydland, Charles Plosser, John Long, Thomas Cooley, and Gary Hansen. The discussion is moderated by Sumru Altug and Warren Young. The panel touches on a wide variety of issues related to real business cycle models, including their history and methodology, starting with the work of Prescott and Kydland at Carnegie Tech and Plosser and Long at Rochester; their applications to policy; and their role in the recent financial crisis and likely future.The panel discussion was held in a session sponsored by the History of Economics Society at the Allied Social Sciences Association (ASSA) meetings in the Randle A Room of the Manchester Grand Hyatt Hotel in San Diego, California.

Pandemic Shock: Methodological Explanation and New Public Contract

2021 ◽  
Vol 96 (3) ◽  
pp. 45-52
Author(s):  
I. V. Zikunova ◽  
Keyword(s):  
Business Cycle ◽  
Supply And Demand ◽  
State Regulation ◽  
Business Cycle Theory ◽  
Business Operations ◽  
New Public ◽  
Socio Economic Development ◽  
The Business Cycle ◽  
Post Industrial

The pandemic shock manifested itself as a new phenomenon in the socio-economic dynamics, and thus necessitated a special reflection in the framework of the business cycle theory. In this study we present the results of theoretical positioning of a pandemic shock using the methodology of business cycle theory, in particular, using the principles of the impulse approach. To formulate conclusions, empirical data were used on the processes observed in 2020 in Russia, in the subsystems of supply and demand, in the system of state regulation. The conclusions obtained by the author can be used as sources for the formation of applied scientific problems for the continuation of research within the framework of the theory of business cycle at the post-industrial stage of socio-economic development. These conclusions include a statement of changes in the organization of labor and business operations, changes in the balance of mutual obligations of the parties to a social contract, conclusions about the emergence of new factors in the quality of human development.

Household Production in Real Business Cycle Theory

2020 ◽  
pp. 157-174
Author(s):  
Jeremy Greenwood ◽  
Richard Rogerson ◽  
Randall Wright
Keyword(s):  
Business Cycle ◽  
Household Production ◽  
Real Business Cycle ◽  
Business Cycle Theory
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