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A Look At The U.S. Business Cycles Through The Lens Of A Tank Model

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  • YONGSEUNG JUNG

    (Department of Economics, Kyung Hee University, Kyungheedae-ro, Dongdaemun-gu, Seoul 02447, Republic of Korea)

Abstract

This paper sets up a two-agent new Keynesian model to explore the role of financial frictions over the post-war U.S. business cycle. The estimated model via maximum likelihood shows that the share of constrained households which has been substantial since the 1960s has significantly increased during the Great Recession. It also finds that the cost-push shock has been most important in explaining the behavior of the detrended output. The cost-push shock has also played a pivotal role in the fluctuation of inflation during the Great Recession, while the monetary policy shock which has been important in the behavior of inflation before the financial crisis has a negligible role during the Great Recession.

Suggested Citation

  • Yongseung Jung, 2023. "A Look At The U.S. Business Cycles Through The Lens Of A Tank Model," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 68(06), pages 1991-2009, December.
    • Handle: RePEc:wsi:serxxx:v:68:y:2023:i:06:n:s021759082050068x
    DOI: 10.1142/S021759082050068X
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    More about this item

    Keywords

    Business cycles; great recession; maximum likelihood estimation; sticky price; TANK;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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