The Evolution of Endogenous Business Cycles

Roger Farmer

No 302012, Working Papers from Hong Kong Institute for Monetary Research

Abstract: This paper distinguishes between two kinds of Endogenous Business Cycle models, and discusses the evolution from first generation EBC1 models to second generation EBC2 models. I argue that EBC1 models, which display dynamic indeterminacy, are part of the evolution of modern macroeconomics that has classical roots dating back to the 1920s. EBC2 models, which display steady-state indeterminacy, are a more radical departure from the classical Real Business Cycle model; they represent a return to one of the most important ideas to emerge from Keynes' (1936) General Theory; that high involuntary unemployment can persist as part of the steady-state equilibrium of a market economy.

Pages: 27 pages
Date: 2012-12
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: THE EVOLUTION OF ENDOGENOUS BUSINESS CYCLES (2016)
Working Paper: The Evolution of Endogenous Business Cycles (2012)
Working Paper: The Evolution of Endogenous Business Cycles (2012)
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