Demand shocks and economic fluctuations

Yi Wen

No 2006-011, Working Papers from Federal Reserve Bank of St. Louis

Abstract: This paper studies conditions under which demand-side shocks can generate realistic business cycles in RBC models. Although highly persistent demand shocks are necessary for generating procyclical investment, variable capacity utilization and habit formation can reduce the required degree of persistence.

Keywords: Business; cycles (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
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Citations: View citations in EconPapers (9)

Published in Economics Letters, March 2006, 90(3), pp. 373-83

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Journal Article: Demand shocks and economic fluctuations (2006)
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