What do interest rates reveal about the functioning of real business cycle models?

Article Abstract:

Standard real business cycle models were found to induce demand responses to technology shocks that are too powerful to be consistent with observations. The simple but rational changes introduced were shown to improve the model's ability to explain the shared movement involving output and interest rates. The introduction of adjustment costs to capital and habit persistence in consumption was found to contribute to an understanding of the mechanism by which technology shocks are spread throughout the economy. However, such modifications do not fully justify the principle that permanent technology shocks are the only driving forces that stimulate fluctuations in the economy.

Interest Rates, Business cycles

---

Money, capital, and redistributive effects of monetary policies

Article Abstract:

The effects of expansionary monetary policies on redistribution were investigated using a theoretical model that features a physical environment with heterogeneous agents. The model contains two frictions, namely, a within-market friction in which agents cannot borrow within each market and a cross-market friction in which agents cannot borrow across markets. It was found that no single monetary policy can restore efficiency when both frictions are in operation, although an expansionary monetary policy is necessary to eliminate the cross-market friction.

Public Finance Activities, Fiscal Policy, Other General Government Support, Coinage & Currency, Econometrics & Model Building, Econometrics, Money, Distribution (Economics), Money supply, Capital, Business models

---

The term structure of interest rates in real and monetary economies

Article Abstract:

A monetary model is presented that extends the conventional asset pricing model through the incorporation of capital, money and labor supply. Interest rates are shown to be characterized by a random walk. This attribute exists even in the absence of a continuous dynamic process. The advantage of this particular model lies in its ability to integrate variability factors with money velocity. Its disadvantage lies in its inability to reasonably predict bond prices.

Similar abstracts:

• Abstracts: Some macroeconomics for the 21st century. Low frequency filtering and real business cycles
• Abstracts: Financial intermediation and regime switching in business cycles. How does globalization affect the synchronization of business cycles?
• Abstracts: Shared quality uncertainty and the introduction of indeterminate goods
• Abstracts: Current account solvency and the Feldstein-Horioka puzzle. Can political monetary cycles be avoided? The arms trade and arms control
• Abstracts: Corporate governance: the role of restructuring transactions. Corporate governance: some theory and implications

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.