A Critical Reflection on Real Business Cycle Models

We argue that the Cambridge capital theory controversies of the 1950s to 1970s were the latest in a series of still-unresolved controversies over three deep issues: explaining and justifying the return to capital; Joan Robinson's complaint that, due to path dependence, equilibrium is not an outcome of an economic process and therefore an inadequate tool for analyzing accumulation and growth; and the role of ideology and vision in fuelling controversy when results of simple models are not robust. We predict these important and relevant issues, latent in endogenous growth and real business cycle theories, will erupt in future controversy.

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The Real Estate Cycle and Real Business Cycle: Evidence from Thailand

Pacific Rim Property Research Journal ◽

10.1080/14445921.2009.11104275 ◽

2009 ◽

Vol 15 (2) ◽

pp. 145-165 ◽

Cited By ~ 3

Author(s):

Piriya Pholphirul ◽

Pungpond Rukumnuaykit

Keyword(s):

Real Estate ◽

Business Cycle ◽

Real Business Cycle ◽

The Real ◽

The Real Estate ◽

Real Estate Cycle

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THE HOURS WORKED–PRODUCTIVITY PUZZLE: IDENTIFICATION IN A FRACTIONAL INTEGRATION SETTING

Macroeconomic Dynamics ◽

10.1017/s1365100514000029 ◽

2014 ◽

Vol 19 (7) ◽

pp. 1593-1621 ◽

Cited By ~ 5

Author(s):

Yuliya Lovcha ◽

Alejandro Perez-Laborda

Keyword(s):

Business Cycle ◽

Fractional Integration ◽

Real Business Cycle ◽

Data Sets ◽

Sampling Uncertainty ◽

Hours Worked ◽

Long Run ◽

The Hours ◽

Short Run ◽

Technology Shock

A recent finding of the SVAR literature is that the response of hours worked to a (positive) technology shock depends on the assumed order of integration of the hours. In this work we relax this assumption, allowing fractional integration in hours and productivity. We find that the sign and magnitude of the estimated responses depend crucially on the identification assumptions employed. Although the responses of hours recovered with short-run (SR) restrictions are positive in all data sets, long-run (LR) identification results in negative, although sometimes not significant responses. We check the validity of these assumptions with the Sims procedure, concluding that both LR and SR are appropriate to recover responses in a fractionally integrated VAR. However, the application of the LR scheme always results in an increase in sampling uncertainty. Results also show that even the negative responses found in the data could still be compatible with real business cycle models.

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REAL BUSINESS CYCLES AFTER THREE DECADES

Macroeconomic Dynamics ◽

10.1017/s1365100513000424 ◽

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.

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