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Real business cycles

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  • Ellen R. McGrattan

Abstract

Real business cycles are recurrent fluctuations in an economy's incomes, products, and factor inputs - especially labor - that are due to nonmonetary sources. These sources include changes in technology, tax rates and government spending, tastes, government regulation, terms of trade, and energy prices. Most real business cycle (RBC) models are variants or extensions of a neoclassical growth model. One such prototype is introduced. It is then shown how RBC theorists, applying the methodology of Kydland and Prescott (Econometrica 1982), use theory to make predictions about actual time series. Extensions of the prototype model, current issues, and open questions are also discussed.

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  • Ellen R. McGrattan, . "Real business cycles," Staff Report, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:370
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    References listed on IDEAS

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    Cited by:

    1. Canova, Fabio & Michelacci, Claudio & López-Salido, J David, 2007. "The Labour Market Effects of Technology Shocks," CEPR Discussion Papers 6365, C.E.P.R. Discussion Papers.
    2. Yilmazkuday, Hakan, 2012. "Business cycles through international shocks: A structural investigation," Economics Letters, Elsevier, vol. 115(3), pages 329-333.
    3. Fabio Canova, 2007. "How much structure in empirical models?," Economics Working Papers 1054, Department of Economics and Business, Universitat Pompeu Fabra.
    4. David N. DeJong & Emilio Espino, 2007. "The Cyclical Behavior of Equity Turnover," Working Paper 294, Department of Economics, University of Pittsburgh, revised Jun 2010.
    5. Canova, Fabio & Sala, Luca, 2009. "Back to square one: Identification issues in DSGE models," Journal of Monetary Economics, Elsevier, vol. 56(4), pages 431-449, May.
    6. Ellen McGrattan & Edward Prescott, 2006. "Why Did U.S. Market Hours Boom in the 1990s?," NBER Working Papers 12046, National Bureau of Economic Research, Inc.
    7. Gancho Ganchev, 2010. "Equilibrium Model in a Monetary Economy," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 24-45.
    8. Gancho Ganchev, 2010. "Equilibrium Model in a Monetary Economy," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 7, pages 97-115.
    9. Fabio Canova & David López-Salido & Claudio Michelacci, 2006. "On the robust effects of technology shocks on hours worked and output," Economics Working Papers 1013, Department of Economics and Business, Universitat Pompeu Fabra, revised Feb 2008.
    10. Harrison, Sharon & Weder, Mark, 2009. "Technological change and the roaring twenties: A neoclassical perspective," Journal of Macroeconomics, Elsevier, vol. 31(3), pages 363-375, September.
    11. Fabio Canova & David Lopez-Salido & Claudio Michelacci, 2010. "The effects of technology shocks on hours and output: a robustness analysis," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(5), pages 755-773.
    12. Dimitris Papageorgiou, 2014. "BoGGEM: a dynamic stochastic general equilibrium model for policy simulations," Working Papers 182, Bank of Greece.
    13. Fabio Canova & David Lopez-Salido & Claudio Michelacci, 2006. "Schumpeterian technology shocks," Economics Working Papers 1012, Department of Economics and Business, Universitat Pompeu Fabra, revised Nov 2007.

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