sticky prices and comovement of business cycle

Junhee Lee ()

No 582, Econometric Society 2004 Far Eastern Meetings from Econometric Society

Abstract: A defining characteristic of business cycle is comovements of economic variables across sectors. But it is not easy to replicate these comovements in standard real business cycle models. Traditionally, however, not only the productivity shocks emphasized in real business cycle models but also monetary shocks have been believed to be important in explaining business cycles . Following this tradition, a two sector sticky price model is constructed in this paper to examine the sectoral comovements of economic variables under nominal rigidities. It turns out that monetary shocks can generate comovements of sectoral variabl

Keywords: comovement over business cycles; sticky prices; sticky wages (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Date: 2004-08-11
New Economics Papers: this item is included in nep-dge and nep-mac
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Citations: View citations in EconPapers (1)

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