Do Sunspots Produce Business Cycles?

Julia Thomas

No 1999-E10, GSIA Working Papers from Carnegie Mellon University, Tepper School of Business

Abstract: We contrast the Farmer and Guo sunspots model with the Hansen indivisible labor real business cycle model using impulse responses, growth spectra, and Watson's measure of fit for calibrated models. We find that the sunspots model is better able to reproduce the typical spectral shape of growth rates found in the data. However, the model, characterized by production externalities and aggregate increasing returns, generates excessive investment volatility and overstates high frequency behavior in employment, investment and output series. The introduction of adjustment costs, in conjunction with separate externality parameters to capital and labor inputs, can reduce these weaknesses substantially, though this may require the assumption of an implausible level of increasing returns.

Date: 1998-12
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.tepper.cmu.edu/andrew/jkt/www/ThomasDec98.pdf
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.tepper.cmu.edu/andrew/jkt/www/ThomasDec98.pdf [301 Moved Permanently]--> https://tepper.cmu.edu/andrew/jkt/www/ThomasDec98.pdf)

Related works:
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:cmu:gsiawp:-476543995

Ordering information: This working paper can be ordered from
https://student-3k.t ... /gsiadoc/GSIA_WP.asp

Access Statistics for this paper

More papers in GSIA Working Papers from Carnegie Mellon University, Tepper School of Business Tepper School of Business, Carnegie Mellon University, 5000 Forbes Avenue, Pittsburgh, PA 15213-3890.
Bibliographic data for series maintained by Steve Spear ().