Countercyclical Markups and News-Driven Business Cycles

Oscar Pavlov and Mark Weder

No 2012-02, 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 fluctuations. The addition of countercyclical markups and modest investment adjustment costs offers an easy fix to this conundrum. The simulated model generates quantitatively realistic business cycles with news shocks accounting for over half of the variance of technology shocks.

Keywords: expectations-driven business cycles; markups (search for similar items in EconPapers)
JEL-codes: E32 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2012-01
New Economics Papers: this item is included in nep-bec, nep-dge and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://media.adelaide.edu.au/economics/papers/doc/wp2012-02.pdf (application/pdf)

Related works:
Journal Article: Countercyclical Markups and News-Driven Business Cycles (2013)
Working Paper: Countercyclical Markups and News-Driven Business Cycles (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:adl:wpaper:2012-02

Access Statistics for this paper

More papers in School of Economics and Public Policy Working Papers from University of Adelaide, School of Economics and Public Policy Contact information at EDIRC.
Bibliographic data for series maintained by Qazi Haque ().