THE NEW CLASSICAL THEORY AND THE REAL BUSINESS CYCLE MODEL

Oana Simona HUDEA (caraman), Sorin George Toma and Marin Burcea
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Oana Simona HUDEA (caraman): Academy of Economic Studies, University of Bucharest
Sorin George Toma: Academy of Economic Studies, University of Bucharest
Marin Burcea: Academy of Economic Studies, University of Bucharest

SEA - Practical Application of Science, 2014, issue 5, 25-30

Abstract: The present paper aims at describing some key elements of the new classical theory-related model, namely the Real Business Cycle, mainly describing the economy from the perspective of a perfectly competitive market, characterised by price, wage and interest rate flexibility. The rendered impulse-response functions, that help us in revealing the capacity of the model variables to return to their steady state under the impact of a structural shock, be it technology or monetary policy oriented, give points to the neutrality of the monetary entity decisions, therefore confirming the well-known classical dichotomy existing between the nominal and the real factors of the economy.

Keywords: New classical theory; Real business cycle; Rational expectations; Macroeconomic modelling; Technology shock; Monetary policy (search for similar items in EconPapers)
JEL-codes: B21 B22 B23 C54 (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:cmj:seapas:y:2014:i:5:p:25-30

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