What is the Major Source of Business Cycles: Spillovers from Land Prices, Investment Shocks, or Anything Else?

Toyoichiro Shirota

No 323, Discussion paper series. A from Graduate School of Economics and Business Administration, Hokkaido University

Abstract: Some recent studies argue that spillovers from land prices into the aggregate economy are the crucial drivers of business cycles. Other studies stress the importance of investment shocks at business cycle frequencies. This study evaluates these two strands of the literature in a single unified framework by estimating a New Keynesian dynamic stochastic general equilibrium model with a collateral constraint on investment financing. The results are twofold: (i) when these features are combined, neither shocks that drives most of land-price fluctuations nor investment shocks are the primary source of U.S. business cycles; and (ii) technology shocks play an important role in business cycles.

Keywords: Source of business cycles; Land price dynamics; Investment shock; Collateral constraint; Bayesian estimation (search for similar items in EconPapers)
Pages: 20 pages
Date: 2018-03
New Economics Papers: this item is included in nep-dge and nep-mac
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Citations: View citations in EconPapers (2)

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Journal Article: What is the major source of business cycles: Spillovers from land prices, investment shocks, or anything else? (2018)
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