New Perspectives on Depreciation Shocks as a Source of Business Cycle Fluctuations

Francesco Furlanetto and Martin Seneca

Economics from Department of Economics, Central bank of Iceland

Abstract: In this paper we study the transmission for capital depreciation shocks. The existing literature in the Real Business Cycle tradition has concluded that these shocks are irrelevant for business cycle fluctuations. We show that these shocks are a potentially important drivers of aggregate fluctuations in a New Keynesian model. Nominal rigidities and some persistence in the shock process are the key ingredients to generate co-movement across real variables.

Date: 2010-07
New Economics Papers: this item is included in nep-bec, nep-cba, nep-mac and nep-opm
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: NEW PERSPECTIVES ON DEPRECIATION SHOCKS AS A SOURCE OF BUSINESS CYCLE FLUCTUATIONS (2014)
Working Paper: New perspectives on depreciation shocks as a source of business cycle fluctuations (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:ice:wpaper:wp48

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