A Real-Business-Cycle Model with an Informal Sector - Lessons for Bulgaria (1999-2018)

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 an informal sector into a real-business-cycle setup 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 presence of a grey economy for the cyclical fluctuations in Bulgaria. We find that incorporating an informal sector improves the model fit against data, as compared to the standard RBC model, and thus this sector is an important ingredient that needs to be considered by researchers interested in business cycle-, or public finance issues.

Keywords: business cycles; informal sector; Bulgaria (search for similar items in EconPapers)
JEL-codes: E24 E32 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2024-01, Revised 2024-01
New Economics Papers: this item is included in nep-dge, nep-eec, nep-iue and nep-tra
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Journal Article: A Real-Business-Cycle model with an informal sector: Lessons for Bulgaria (1999-2018) (2024)
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