EconPapers    
Economics at your fingertips  
 

Evolution of Modern Business Cycle Models: Accounting for the Great Recession

Patrick Kehoe (), Virgiliu Midrigan () and Elena Pastorino ()

No 566, Staff Report from Federal Reserve Bank of Minneapolis

Abstract: Modern business cycle theory focuses on the study of dynamic stochastic general equilibrium models that generate aggregate fluctuations similar to those experienced by actual economies. We discuss how this theory has evolved from its roots in the early real business cycle models of the late 1970s through the turmoil of the Great Recession four decades later. We document the strikingly different pattern of comovements of macro aggregates during the Great Recession compared to other postwar recessions, especially the 1982 recession. We then show how two versions of the latest generation of real business cycle models can account, respectively, for the aggregate and the cross-regional fluctuations observed in the Great Recession in the United States.

Keywords: New Keynesian models; Financial frictions; External validation (search for similar items in EconPapers)
JEL-codes: E13 E32 E52 E61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-dge, nep-his, nep-knm and nep-mac
Date: 2018-06-14
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link)
https://minneapolisfed.org/research/sr/sr566.pdf Full text (application/pdf)

Related works:
Journal Article: Evolution of Modern Business Cycle Models: Accounting for the Great Recession (2018) Downloads
Working Paper: Evolution of Modern Business Cycle Models: Accounting for the Great Recession (2018) Downloads
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:fip:fedmsr:566

Ordering information: This working paper can be ordered from
http://www.minneapolisfed.org/pubs/

DOI: 10.21034/sr.566

Access Statistics for this paper

More papers in Staff Report from Federal Reserve Bank of Minneapolis Contact information at EDIRC.
Bibliographic data for series maintained by Jannelle Ruswick ().

 
Page updated 2019-11-18
Handle: RePEc:fip:fedmsr:566