Can capacity constraints explain asymmetries

Malte Knüppel

No 2008,01, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank, Research Centre

Abstract: In this paper, we investigate the ability of a modified RBC model to reproduce asymmetries observed for macroeconomic variables over the business cycle. In order to replicate the empirical skewness of major U.S. macroeconomic variables, we introduce a capacity constraint into an otherwise prototypical RBC model. This constraint emerges due to the assumption of kinked marginal costs of utilization, where the kink is located at a utilization rate of 100 percent. We find that a model with a suitably calibrated cost function reproduces the empirical coe��cients of skewness remarkably well.

Keywords: Capacity utilization; capacity constraints; asymmetry; RBC model (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-dge and nep-mac
Date: 2008

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