Countercyclical Markups and News-Driven Business Cycles

Oscar Pavlov and Mark Weder

No 2011-28, School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy

Abstract: The standard one-sector real business cycle model is unable to generate expectations-driven business cycles. The current paper shows that this conundrum can be solved by adding countercyclical markups and modest capital adjustment costs.

Keywords: expectations-driven business cycles; markups (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2011-07
New Economics Papers: this item is included in nep-bec, nep-cba, nep-dge and nep-mac
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Related works:
Journal Article: Countercyclical Markups and News-Driven Business Cycles (2013)
Working Paper: Countercyclical Markups and News-Driven Business Cycles (2012)
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