Testing Real Business Cycles Models in an Emerging Economy

Raphael Bergoeing and Raimundo Soto

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: RBC models have been successful when applied to developed economies: their abilities in replicating the data of emerging countries remain largely unexplored. The rapid but unstable growth process in developing countries and their relatively less developed market structure pose a formidable challenge to neoclassical general equilibrium models. Using data of the Chilean economy, we explore the effects of market rigidities and macroeconomic policies on the dynamics of consumption, investment, inflation and factor markets. We find that business cycles models replicate much of the observed fluctuations of real and monetary variables in the Chilean economy, despite its idiosyncratic economic structure. Using a calibrated model we find that technology shocks, fiscal policies and labor market rigidities are the main sources of economic cycles, while monetary policies and wage indexation play a minor role. Econometric tests support the use of our calibrated model as an adequate representation of the Chilean data.

Date: 2002-06
New Economics Papers: this item is included in nep-dge and nep-fin
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Citations: View citations in EconPapers (11)

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Related works:
Chapter: Testing Real Business Cycle Models in a Emerging Economy (2005)
Working Paper: Testing Real Business Cycle Models in an Emerging Economy (2002)
Working Paper: Testing Real Business Cycle Models in an Emerging Economy (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:chb:bcchwp:159

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