A Sunspot Paradox

Thomas Hintermaier

No 150, Economics Series from Institute for Advanced Studies

Abstract: Calibrated models of the business cycle typically assume a certain frequency at which economic agents take decisions. In this paper I show that the local stability properties of dynamic stochastic general equilibrium macro models may depend on the length of a period in the model economy. This leads to the following paradoxical situation: For given parameters, and in particular those assigning values of imperfections in the economy, the economy may be driven by sunspots at some frequencies while sunspots can have no impact at other frequencies.

Keywords: Sunspots; Indeterminacy; High frequency; Temporal aggregation (search for similar items in EconPapers)
JEL-codes: C60 E30 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2004-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://irihs.ihs.ac.at/id/eprint/1549 First version, 2004 (application/pdf)

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Journal Article: A sunspot paradox (2005)
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