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Theories and Methods of the Business Cycle. Part 1: Dynamic Stochastic General Equilibrium Models III. Evaluating the RBC model Jean-Olivier HAIRAULT , Professeur à Paris I Panthéon-Sorbonne et à l’Ecole d’Economie de Paris (EEP). III. Evaluating the RBC model. 1. A controversial approach. - PowerPoint PPT Presentation
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Theories and Methods of the Business Cycle.Part 1: Dynamic Stochastic General Equilibrium ModelsIII. Evaluating the RBC model
Jean-Olivier HAIRAULT, Professeur à Paris I Panthéon-Sorbonne et à l’Ecole d’Economie de Paris (EEP)
III. Evaluating the RBC model. 1. A controversial approach
II. Evaluating the RBC model. 1. A controversial approach
II. Evaluating the RBC model. 1. A controversial approach
II. Evaluating the RBC model. 2. The productivity shock
II. Evaluating the RBC model. 2.1 The problem of volatility
II. Evaluating the RBC model. 2.1 The problem of volatility
Make your own experiment sdepsilona=.0012
The variance of output is approximately divided by 6
Changes in the variance of the productivity shock work to
rescale the aggregate fluctuations.
But at this point nothing in the model explain how to
correct the measurement of the SR.
II. Evaluating the RBC model. 2.2 The problem of persistence
II. Evaluating the RBC model. 2.2 The problem of persistence
II. Evaluating the RBC model. 2.2 The problem of persistence
II. Evaluating the RBC model. 2.2 The problem of persistence
II. Evaluating the RBC model. 2.2 The problem of persistence
II. Evaluating the RBC model. 2.2 The problem of persistence
Hump-shapedReponse of Output after ashock
II. Evaluating the RBC model. 3. The problem of labor supply elasticity
II. Evaluating the RBC model. 3. The problem of labor supply elasticity
II. Evaluating the RBC model. 3. The problem of labor supply elasticity
Making your own experiment by lowering the value of eta
II. Evaluating the RBC model. 4. The problem of the correlation between labor and wages
Productivity shocks lead to a strong positive correlation
between labor and wages at odds with facts (roughly zero
in US, negative in European countries).
Results:
E
E’
E’’
w
Ns, Nd
III. Evaluating the RBC model. 5. RBC or DGSE models?
Two kinds of responses
Some criticisms have been adressed in the RBC theory, ie.
Models where productivity shocks are the main
perturbation of optimal fluctuations.
Some criticisms have led to take into account new-
keynesian features as nominal and real rigidities in DGSE
models.