Abstract
We present a neoclassical model of capital accumulation with frictional labour markets. Under standard parameter values the equilibrium of the model is indeterminate and consequently displays expectations-driven business cycles - so-called endogenous business cycles. We study the properties of such cycles, and find that the model predicts the high autocorrelation in output growth and the hump-shaped impulse response of output found in US data - important features that existing endogenous real business cycle models fail to explain. The indeterminacy of the equilibrium stems from job search externalities and does not rely on increasing returns to scale as in most models.
| Original language | English (US) |
|---|---|
| Journal | Economic Journal |
| Volume | 115 |
| Issue number | 502 |
| DOIs | |
| State | Published - Mar 1 2005 |
| Externally published | Yes |
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ASJC Scopus subject areas
- Economics and Econometrics
Cite this
Endogenous business cycles with frictional labour markets. / Hashimzade, Nigar; Ortigueira, Salvador.
In: Economic Journal, Vol. 115, No. 502, 01.03.2005.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Endogenous business cycles with frictional labour markets
AU - Hashimzade, Nigar
AU - Ortigueira, Salvador
PY - 2005/3/1
Y1 - 2005/3/1
N2 - We present a neoclassical model of capital accumulation with frictional labour markets. Under standard parameter values the equilibrium of the model is indeterminate and consequently displays expectations-driven business cycles - so-called endogenous business cycles. We study the properties of such cycles, and find that the model predicts the high autocorrelation in output growth and the hump-shaped impulse response of output found in US data - important features that existing endogenous real business cycle models fail to explain. The indeterminacy of the equilibrium stems from job search externalities and does not rely on increasing returns to scale as in most models.
AB - We present a neoclassical model of capital accumulation with frictional labour markets. Under standard parameter values the equilibrium of the model is indeterminate and consequently displays expectations-driven business cycles - so-called endogenous business cycles. We study the properties of such cycles, and find that the model predicts the high autocorrelation in output growth and the hump-shaped impulse response of output found in US data - important features that existing endogenous real business cycle models fail to explain. The indeterminacy of the equilibrium stems from job search externalities and does not rely on increasing returns to scale as in most models.
UR - http://www.scopus.com/inward/record.url?scp=15044344963&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=15044344963&partnerID=8YFLogxK
U2 - 10.1111/j.0013-0133.2005.00985.x
DO - 10.1111/j.0013-0133.2005.00985.x
M3 - Article
AN - SCOPUS:15044344963
VL - 115
JO - Economic Journal
JF - Economic Journal
SN - 0013-0133
IS - 502
ER -