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An RBC model with Epstein-Zin (non-expected-utility) recursive preferences: lessons from Bulgaria (1999-2018)

Aleksandar Vasilev

EconStor Open Access Articles and Book Chapters, 2021

Abstract: We introduce Epstein-Zin (1989, 1991) preferences into a real-business-cycle (RBC) model with government. We calibrate the model economy to Bulgarian data for the period after the currency board regime (1999-2018). We evaluate the quantitative importance of the presence of "early resolution of uncertainty" motive for the propagation of cyclical fluctuations in Bulgaria. Allowing for Epstein-Zin preferences improves the model performance against data, and in addition this extended setup dominates the standard RBC model framework, e.g., Vasilev (2009).

Keywords: business cycle flucuations; Epstein-Zin preferences; Bulgaria (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Date: 2021
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https://www.econstor.eu/bitstream/10419/243165/1/e ... JMEF-Summer-2021.pdf (application/pdf)

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Working Paper: An RBC model with Epstein-Zin (non-expected-utility) recursive preferences: lessons from Bulgaria (1999-2018) (2020) Downloads
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