The role of energy in a real-business-cycle model with an endogenous capital utilization rate and a government sector: lessons from Bulgaria (1999-2016)

Aleksandar Vasilev

EconStor Open Access Articles and Book Chapters, 2019, vol. 5, issue 52, 130-141

Abstract: We introduce a pro-cyclical endogenous utilization rate of physical capita1 stock into a real-business-cycle model augmented with a detailed government sector. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999-2016). We investigate the quantitative importance of the endogenous depreciation rate, and the capital utilization mechanism working through the use of energy for cyclical fluctuations in Bulgaria. In particular, a positive shock to energy prices in the model works like a negative technological shock. Allowing for variations in factor utilization and the presence of energy as a factor of production improves the model performance against data, and in addition this extended setup dominates the standard RBC model framework with constant depreciation and a fixed utilization rate of physical capital, e.g., Vasilev (2009)

Keywords: Business fluctuations; capital utilization rate; endogenous depreciation rate; energy use; energy prices; Bulgaria (search for similar items in EconPapers)
JEL-codes: E22 E27 E32 (search for similar items in EconPapers)
Date: 2019
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https://www.econstor.eu/bitstream/10419/181287/1/RBC_energy_CEEJ_accepted.pdf (application/pdf)

Related works:
Journal Article: The Role of Energy in a Real Business Cycle Model with an Endogenous Capital Utilization Rate in a Government Sector: Lessons from Bulgaria (1999–2016) (2018)
Working Paper: The Role of Energy in a Real-business-cycle Model with an Endogenous Capital Utilization Rate and a Government Sector: Lessons from Bulgaria (1999-2016) (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:espost:181287

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