Yet, there is increasing skepticism that technology. About nine million pdf files are downloaded through repec every year. Long and plosser 1983 coined the term real business cycles and used it to describe cycles generated by random changes in technology. Resuscitating real business cycles, in handbook of macroeconomics 1999. Real business cycle theory is built on the assumption that there are large.
Macroeconomic time seriesinhandbook of macroeconomics. Deconstructing the success of real business cycles emi nakamura the empirical success of real business cycle rbc models is often judged by. The real business cycle rbc research program has grown specularly over the last decade, as its concepts. Real business cycles federal reserve bank of minneapolis. Real business cycle theory economics and sociology. Over the last century, exploration of real business cycles. Rebelo, 1998, resuscitating real business cycles, handbo. Rebelo, 1999 abstract cited by 394 7 self add to metacart. Some skeptical observations on real business cycle theory pdf. This chapter exposits the basic rbc model and shows that it requires large technology shocks to produce.
While the last decade has seen the addition of other types of shocks in these models. Pdf the real business cycle rbc research program has grown spectacularly over the last two decades, as its concepts and methods have. Endogenous market structures and the business cycle. The real business cycle rbc research program has grown spectacularly over the last decade, as its concepts and methods have diffused. The real business cycle rbc research program has grown spectacularly over the last decade, as its concepts and methods have diffused into. Kings work spans many areas, including business cycle theory and measurement, real business cycle theory, monetary policy, and economic growth. Charles irving plosser born september 19, 1948 is a former president of. Real business cycle theory this section of the textbook focuses on explaining the behavior of the business cycle. Kydland business cycles and aggregate labor market fluctuations. How well do we understand business cycles and growth. Real business cycle in an oildependent economy harvards. Resuscitating real business cycles king and rebelo, 2000 measures of fit for calibrated models watson, 1993 stickiness sims, 1998 w only the models of neutral stickiness, in the.
Rebelo, journal of political economy, 1993, 101, 245273. King and sergio rebelo, resuscitating real business cycles, in j. Real business cycle theory assigns a central role to technology shocks as the source of aggregate fluctuations. Despite their ability to explain these effects, the modified models do not resuscitate technology shocks as the driving force of business cycles. This chapter exposits the basic rbc model and shows that it requires large technology shocks. It has been the focus of a great deal of debate and controversy, and yet, to date, there has been no single source for material on real business cycles. Feb 01, 2000 the real business cycle rbc research program has grown spectacularly over the last decade, as its concepts and methods have diffused into mainstream macroeconomics. Duke university administrative information schedule. Life cycle permanent income model romer, advanced macroeconomics, 3rd ed.
Resuscitating real business cycles, handbook of macroeconomics, chapter 14. Most real business cycle rbc models are variants or extensions of a neoclassical growth model. Handbook of macroeconomics, northholland, 9271007, 2000. Robert king and sergio rebelo no 467, rcer working papers from university of rochester center for economic research rcer abstract. The models we study have close analogs in the real business cycle literature. Questions posed by kpr what are the business cycle properties of the basic neoclassical model of capital accumulation, when. The real business cycle rbc research program has grown spectacularly over the last decade, as its concepts. Understanding real business cycles, journal of economic perspectives, 33, pp. These models are used by macroeconomists to think about business cycle. He is currently professor at the department of economics at boston university, editor of the journal of monetary economics, research consultant to the federal reserve bank of richmond, and a member of the national bureau of economic research before that he was a professor at the university of rochester and then at the. Will cover practice exam 1 pdf and practice exam 2 pdf.
University of california, san diego spring 2014 department of. Pdf resuscitating real business cycles semantic scholar. Business cycle dating committee, the nbers business cycle dating procedure, nber, oct. As king and rebelo 1999 discuss in resuscitating real business cycles, when persistent technology shocks are fed through a standard real business cycle.
Rebelo, resuscitating real business cycles, in handbook of macroeconomics edited by john taylor and michael woodford, north holland, 1999, 9271007. Current real business cycle theories and aggregate labormarket fluctuations christiano, l. The real business cycle rbc research program has grown spectacularly over the last decade. Econ 205b advanced macroeconomic theory ii ucsc winter. Yet, there is increasing skepticism that technology shocks are a major source of business fluctuations.
As king and rebelo 1999 discuss in resuscitating real business cycles, when persistent technology shocks are fed through a standard real business cycle model, the simulated economy displays patterns similar to those exhibited by actual business cycles. Real business cycles the real business cycle model has become the dominant mode of business analysis within the new classical school of macroeconomic thought. Resuscitating real business cycles kellogg school of management. In lawrence blume and steven durlauf, editors, the new palgrave dictionary of economics, volume 2. Real business cycle theory assigns a central role to technology shocks as the source of aggregate. The terms business cycle, shortrun macroeconomics, and economic. No 467, rcer working papers from university of rochester center for economic research rcer abstract. Pdf real business cycle theory methodology and tools. Our purpose in this paper is to present a class of convex endogenous growth models, and to analyze their performance in terms of both growth and business cycle criteria. In fact, we interpret the exogenous growth rate of productivity as an endogenous growth rate of human capital. It has enjoyed great success for its ability to replicate most of the observed characteristics of u. Search in the labor market and the real business cycle, journal of monetary economics 36.
Rebelo 1999, \ resuscitating real business cycles in. In the past few decades, real business cycle theory has developed rapidly after the initiation of kydland and prescott in 1982. In general, we will study four broad classes of models to explain economic. Economic growth and business cycles, in cooley, ed. Duke university, economics 702 fall 2016 macroeconomic analysis i part 1 craig burnside mw 1005a1120a, socsci 111 craig. The empirical success of real business cycle rbc models is often judged by their ability to explain the behavior of a multitude of real macroeconomic variables using a single exogenous shock process. Resuscitating real business cycles, handbook of macroeconomics, in. Aug 17, 2017 real business cycles are recurrent fluctuations in an economys incomes, products, and factor inputs especially labour that are due to nonmonetary sources. Is the technologydriven real business cycle hypothesis dead. This course covers the two canonical business cycle macro modelsthe standard real business cycle rbc model and the standard new keynesian nk model. Moore, credit cycles, journal of political economy, 1997, 1052, 211248.
Yet, there is increasing skepticism that technology shocks are a major. Request pdf resuscitating real business cycles the real business cycle rbc research program has grown spectacularly over the last decade, as its concepts and methods have diffused into. Introduction business cycle research studies the causes and consequences of the recurrent expansions and contractions in aggregate economic activity that occur in most industrialized countries. It has grown substantially as an independent literature and served as a widely recognized framework for studies of the economy at business cycle frequencies. Resuscitating real business cycles, rcer working papers 467, university of rochester center for economic research rcer. Resuscitating real business cycle, nber working paper. Handbook of macroeconomics vol 1, part b, pages 7411228. Liquidity effects and the monetary transmission mechanism. That is, a theoretical real business cycle world is constructed and the. In addition, the transition from monetary to real theories of the business cycle was. The capital stock varies little at business cycle frequencies years. No 7534, nber working papers from national bureau of economic research, inc abstract. The basic neoclassical model, journal of monetary economics 21 23. They will discuss homework solutions as well as analyze a variety of models that.
Rebelo, 2000, resuscitating real business cycles, in handbook of macroe. Rebelo, resuscitating real business cycles, handbook of macroeconomics, 1999 pdf lecture slides for 11 and 12 as pdf. Unemployment fiscal multipliers, journal of monetary economics 57 5, pp. Resuscitating real business cycles, nber working papers 7534, national bureau of economic research, inc. Real business cycle statistics for the venezuelan economy.
This chapter exposits the basic rbc model and shows that it requires large technology shocks to produce realistic business. Merzsearch in the labor market and real business cycle journal of monetary economics, 36 1995, pp. Real business cycles are recurrent fluctuations in an economy. Robert graham king born may 24, 1951 is an american macroeconomist.
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