Countercyclical Markups and News-Driven Business Cycles

Oscar Pavlov and Mark Weder

Review of Economic Dynamics, 2013, vol. 16, issue 2, 371-382

Abstract: The standard one-sector real business cycle model is unable to generate expectations-driven fluctuations. The addition of countercyclical markups and modest investment adjustment costs offers an easy fix to this conundrum. The simulated model replicates the regular features of U.S. aggregate fluctuations. (Copyright: Elsevier)

Keywords: Expectations-driven business cycles; Markups (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (13)

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Working Paper: Countercyclical Markups and News-Driven Business Cycles (2011)
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DOI: 10.1010/j.red.2013.02.004

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