The Role of Energy in a Real-business-cycle Model with an Endogenous Capital Utilization Rate and a Government Sector: Lessons from Bulgaria (1999-2016)

Aleksandar Vasilev

Bulgarian Economic Papers from Faculty of Economics and Business Administration, Sofia University St Kliment Ohridski - Bulgaria // Center for Economic Theories and Policies at Sofia University St Kliment Ohridski

Abstract: We introduce a pro-cyclical endogenous utilization rate of physical capita1 stock into a real-business-cycle model augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We investigate the quantitative importance of the endogenous depreciation rate, and the capital utilization mechanism working through the use of energy for cyclical uctuations in Bulgaria. In particular, a positive shock to energy prices in the model works like a negative technological shock. Allowing for variations in factor utilization and the presence of energy as a factor of production improves the model performance against data, and in addition this extended setup dominates the standard RBC model framework with constant depreciation and a fixed utilization rate of physical capital, e.g., Vasilev (2009).

Keywords: Business uctuations; capital utilization rate; endogenous depreciation rate; energy use; energy prices; Bulgaria (search for similar items in EconPapers)
JEL-codes: E22 E32 E37 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2018-04, Revised 2018-04
New Economics Papers: this item is included in nep-dge, nep-ene, nep-mac and nep-tra
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The role of energy in a real-business-cycle model with an endogenous capital utilization rate and a government sector: lessons from Bulgaria (1999-2016) (2019)
Journal Article: The Role of Energy in a Real Business Cycle Model with an Endogenous Capital Utilization Rate in a Government Sector: Lessons from Bulgaria (1999–2016) (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:sko:wpaper:bep-2018-05

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