Essays On Expectations Driven Business Cycles
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Essays On Expectations Driven Business Cycles
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Author : Oscar Pavlov
language : en
Publisher:
Release Date : 2013
Essays On Expectations Driven Business Cycles written by Oscar Pavlov and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with Business cycles categories.
This thesis addresses the role of imperfect competition in business cycles driven by expectations and beliefs about the future state of the economy. It consists of three self-contained papers. The first paper examines the roles of composition of aggregate demand and taste for variety in a real business cycle model with endogenous entries and exits of monopolistically competitive firms. It finds that taste for variety can alone make the economy susceptible to endogenous (sunspot driven) business cycles. Importantly, in light of recent research suggesting that aggregate markups in the U.S. are procyclical, sunspot equilibria emerge with procyclical markups that are within empirically plausible ranges. The second paper considers aggregate markup variations in business cycles driven by news about future total factor productivity. It shows that the addition of endogenous countercyclical markups and investment adjustment costs allows the standard one-sector real business cycle model to generate empirically supported expectations driven fluctuations. The simulated model reproduces the regular features of U.S. aggregate fluctuations. The third paper investigates the role of product variety effects and variable markups in expectations-driven business cycles. It demonstrates that taste for variety and investment adjustment costs allow the otherwise canonical real business cycle model to display quantitatively realistic fluctuations in response to news about future total factor productivity. Moreover, the interaction between price-cost decisions and firm entry and exit allows such business cycles to occur for empirically plausible levels of procyclical markups and variety effects.
Essays On Expectations Driven Business Cycles
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Author : Anca-Ioana Sirbu
language : en
Publisher:
Release Date : 2012
Essays On Expectations Driven Business Cycles written by Anca-Ioana Sirbu and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with Business cycles categories.
Three Essays On Expectation Driven Business Cycles
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Author : Shen Guo
language : en
Publisher:
Release Date : 2009
Three Essays On Expectation Driven Business Cycles written by Shen Guo and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009 with categories.
This thesis studies business cycles driven by agents' expectation of future technology changes. The first chapter explores the effects which nominal rigidities and monetary policies have on the generation of Pigou cycles. The optimal response of the central bank is analyzed under circumstances when agents receive a signal indicating the technology change in the future. To achieve these objectives, I introduce nominal rigidities and monetary policy into a standard two-sector model with non-durable and durable goods. The optimal reaction of the central bank is found by solving the Ramsey optimization problem. I find that nominal rigidities tend to amplify the responses to the expectation and monetary policies affect the expectation driven business cycles by affecting the real interest rate and user cost of durable goods. Another interesting result is that a simple policy rule reacting to the inflation rates in both non-durable and durable sector with appropriate weights can closely mimic the performance of the Ramsey policy. The second chapter estimates a sticky price two-sector model with home production and capital adjustment costs to assess the significance of the news shocks in generating aggregate fluctuations. The analysis suggests that news shocks account for about 34% of the fluctuations in the aggregate output, 25% of the fluctuations in consumption-sector output and 38% of the fluctuations in investment-sector output. The third chapter explores the booms and busts induced by news shocks in a model economy with financial market frictions. With the presence of financial market frictions, firms have to pay an external finance premium which depends inversely on their net values. This provides firms with an incentive to build up capital stocks now to lower the external finance premium in the future. When firms receive news indicating a future technology improvement, they anticipate the need for more capital and so more external finance in the future; they could lower their future external finance costs by building up their capital and net values now. By adding financial market frictions into an otherwise standard RBC model, the model in chapter 3 succeeds in generating a boom when a news shock hits the economy.
Three Essays On The Role Of Expectations In Business Cycles
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Author : Rémi Vivès
language : en
Publisher:
Release Date : 2019
Three Essays On The Role Of Expectations In Business Cycles written by Rémi Vivès and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
In this thesis, I investigate the role of expectations in business cycles by studying three different kinds of expectations. First, I focus on a theoretical explanation of business cycles generated by changes in expectations which turn out to be self-fulfilling. This chapter improves a puzzle from the sunspot literature, thereby giving more evidence towards an interpretation of business cycles based on self-fulfilling prophecies. Second, I empirically analyze the propagation mechanisms of central bank announcements through changes in market participants' beliefs. This chapter shows that credible announcements about future unconventional monetary policies can be used as a coordination device in a sovereign debt crisis framework. Third, I study a broader concept of expectations and investigate the predictive power of political climate on the pricing of sovereign risk. This chapter shows that political climate provides additional predictive power beyond the traditional determinants of sovereign bond spreads. In order to interrogate the role of expectations in business cycles from multiple angles, I use a variety of methodologies in this thesis, including theoretical and empirical analyses, web scraping, machine learning, and textual analysis. In addition, this thesis uses innovative data from the social media platform Twitter. Regardless of my methodology, all my results convey the same message: expectations matter, both for economic research and economically sound policy-making.
Essays In Expectation Driven Business Cycle And Wage Polarization
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Author : Quazi Fidia Farah
language : en
Publisher:
Release Date : 2018
Essays In Expectation Driven Business Cycle And Wage Polarization written by Quazi Fidia Farah and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2018 with categories.
This dissertation investigates two essential features of the US economy. First, it explores how news about future productivity changes business cycle fluctuations. Using the a representative agent model, it shows that implementation labor in workplace organization could be an important channel through which news about the fundamentals can realistically generate US business cycle fluctuations. Further this idea is extended using the perspective of sunspot fluctuations. In particular, the model can lead to multiple equilibria under specific parameterizations. Second, a general equilibrium model has been developed with heterogeneous agents to explain the wage polarization feature of the US labor market, particularly how the price of an important technology is connected to lifetime earnings of agents and affects their college decisions. The following summarizes the three chapters of my dissertation. The first chapter which I co-authored with Dr. Blankenau, argues that purchasing investment goods does not directly increase the productive capacity of a business. Changes in the business through the installation of capital, worker training, and workplace reorganization are often required. These changes themselves are not easily automated. Change requires workers. We build a model where investment requires a complementary labor input. This mechanism is embedded in a representative agent model with capacity utilization, adjustment costs, and separable preferences. We show that this environment can yield positive co-movement between consumption, investment, and labor hours when the economy experiences a news shock about future productivity, thus providing an additional channel through which news shocks can generate key business cycle features. The second chapter is an extension of the first chapter. I investigate the indeterminacy in a representative agent model with implementation labor and increasing returns in production. First, my analysis shows that a representative agent with implementation labor can exhibit increasing returns to scale. Then I show that self-fulfilling beliefs of agents lead to business cycle fluctuations in which multiple equilibria can arise under specific parameterizations. Specifically, implementation labor in the production of capital is the highly important, necessary condition for the self-fulling equilibrium outcome. The third chapter, which is also a joint work with Dr. Blankenau, discusses the wage polarization feature of the US labor market. We build a general equilibrium model with heterogeneous agents, showing how wage polarization can emerge when the price of computer capital falls. Consequently, we find the share of the population with a college degree decreases. Our findings are consistent with recent empirical data that show a U-shaped wage growth pattern in the US as well as a slower growth rate of college-educated workers despite the high returns of investing in education. In the model, we assume that each agent is born with a portfolio of skills. Specifically, each agent can provide manual labor, routine labor, and abstract labor and must decide how much of each to provide. An agent can increase efficiency in all types of labor by attending college. All three types of labor are valued in the labor market at an endogenously determined wage rate. Computer capital is a substitute for routine labor. As its price falls and its quantity increases, agents with a relative aptitude for routine labor no longer find it advantageous to attend college. Since routinization of tasks harms middle-income agents, the model has government policy implications for observed wage polarization.
Business Cycles And Equilibrium
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Author : Fischer Black
language : en
Publisher: John Wiley & Sons
Release Date : 2009-11-02
Business Cycles And Equilibrium written by Fischer Black and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2009-11-02 with Business & Economics categories.
An updated look at what Fischer Black's ideas on business cycles and equilibrium mean today Throughout his career, Fischer Black described a view of business fluctuations based on the idea that a well-developed economy will be continually in equilibrium. In the essays that constitute this book, which is one of only two books Black ever wrote, he explores this idea thoroughly and reaches some surprising conclusions. With the newfound popularity of quantitative finance and risk management, the work of Fischer Black has garnered much attention. Business Cycles and Equilibrium-with its theory that economic and financial markets are in a continual equilibrium-is one of his books that still rings true today, given the current economic crisis. This Updated Edition clearly presents Black's classic theory on business cycles and the concept of equilibrium, and contains a new introduction by the person who knows Black best: Perry Mehrling, author of Fischer Black and the Revolutionary Idea of Finance (Wiley). Mehrling goes inside Black's life to uncover what was occurring during the time Black wrote Business Cycles and Equilibrium, while also shedding light on what Black would make of today's financial and economic meltdown and how he would best advise to move forward. The essays within this book reach some interesting conclusions concerning the role of equilibrium in a developed economy Warns about the use and abuse of modeling Explains the risky business of risk in a straightforward and accessible style Contains chapters dedicated to "the effects of uncontrolled banking," "the trouble with econometric models," and "the effects of noise on investing" Includes commentary on Black's life and work at the time Business Cycles and Equilibrium was written as well as insight as to what Black would make of the current financial meltdown Engaging and informative, the Updated Edition of Business Cycles and Equilibrium will give you a better understanding of what is really going on during these uncertain and volatile financial times.
Essays On Business Cycles
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Author : Thuy Lan Nguyen
language : en
Publisher:
Release Date : 2014
Essays On Business Cycles written by Thuy Lan Nguyen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with categories.
Although news shocks are important in explaining the 1980 recession and the 1993-94 boom, they do not explain much of other business cycles in our sample. Moreover, the contribution of news shocks to explaining short run fluctuations is negligible. These results arise because data on expectations show that changes in expectations are not large and do not resemble actual movements of output. Therefore, news shocks cannot be the main driver of business cycles. Chapters Two and Three focus on the driving forces of business cycles in open economies. We start Chapter Two with an observation that business cycles are strongly correlated across countries. We document that this pattern is also true for small open economies between 1900 and 2006 using a novel data set for 17 small developed and developing countries. Furthermore, we provide a new evidence about the role of common shocks in business cycles for small open economies in a structural estimation of a real small open economy model featuring a realistic debt adjustment cost and common shocks.
Economic Complexity And Equilibrium Illusion
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Author : Ping Chen
language : en
Publisher: Routledge
Release Date : 2010-04-05
Economic Complexity And Equilibrium Illusion written by Ping Chen and has been published by Routledge this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-04-05 with Business & Economics categories.
The Principle of Large Numbers indicates that macro fluctuations have weak microfoundations; persistent business cycles and interrupted technologies can be better characterized by macro vitality and meso foundations. Economic growth is limited by market extent and ecological constraints. The trade-off between stability and complexity is the foundation of cultural diversity and mixed economies. The new science of complexity sheds light on the sources of economic instability and complexity. This book consists of the major work of Professor Ping Chen, a pioneer in studying economic chaos and economic complexity. They are selected from works completed since 1987, including original research on the evolutionary dynamics of the division of labour, empirical and theoretical studies of economic chaos and stochastic models of collective behavior. Offering a new perspective on market instability and the changing world order, the basic pillars in equilibrium economics are challenged by solid evidence of economic complexity and time asymmetry, including Friedman’s theory of exogenous money and efficient market, the Frisch model of noise-driven cycles, the Lucas model of microfoundations and rational expectations, the Black-Scholes model of option pricing, and the Coase theory of transaction costs. Throughout, a general theory based on complex evolutionary economics is developed, which integrates different insights from Marx, Marshall, Schumpeter, Keynes and offers a new understanding of the evolutionary history of division of labour. This book will be of interest to postgraduates and researchers in Economics, including macroeconomics, financial economics, advanced econometrics and economic methodology.
Expectations
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Author : Arie Arnon
language : en
Publisher: Springer Nature
Release Date : 2020-03-20
Expectations written by Arie Arnon and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-03-20 with Business & Economics categories.
This book provides a unique historical perspective on expectations in economic theory, and applications of expectations models in economic history. Based on papers presented at the 2017 Thomas Guggenheim Conference, it brings together the work of economists, historians of economics, and economic historians on issues and events concerning expectations in economics and economic history. The contributions address: (i) the history of expectations models; (ii) growth, expectations and political economy; (iii) controversies regarding expectations methods and models; (iv) expectations in theory and reality; and (v) expectations in economic history. The book opens with a lecture by Thomas Guggenheim Prize winner Duncan Foley on the evolution of expectations in modern economic thought. The remaining content is divided into two parts, the first of which focuses on the utilization of expectations in the “ancient” and “meso” periods of high theory, i.e., from Smithian to Keynesian approaches. The papers cover topics such as “modern” applications of expectations in both “Tobinesque-Phillips” and “Harrodian-Solowian” contexts, and the debate between Friedmanite and Keynesian approaches to expectation formation. In turn, the last part presents essays on the role of economic expectations in connection with historical events and contexts, ranging from the early 20th century to World War II, and on the application of expectations theory to hyperinflation and stabilization, taking Israel as a case study.
In Search Of Economic Indicators
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Author : W.H. Strigel
language : en
Publisher: Springer Science & Business Media
Release Date : 2012-12-06
In Search Of Economic Indicators written by W.H. Strigel and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-12-06 with Business & Economics categories.
The object of this collection of essays is to acquaint the English speaking reader with the work of the IFO Institute for Economic Re search, tlunich, in the field of business cycle surveys. These written surveys of about 10,000 businessmen in the West German economy collect information which is not otherwise contained in the official statis tics. The information in question primarily involves entrepreneurial judgements and anticipations (plans and expectations). These variables have proved to be very useful for economic diagnosis and prognosis. In the meantime, the survey methods developed by the IFO Institute have been adopted by 16 different countries throughout the world. The monthly business cycle surveys carried out by the EEC Commission, Brussels, in the industries of the member countries are also based to a large extent on the IFO methods. This is the first publication in English to furnish a comprehensive review of the IFO survey technique and the possibilities of utilization of this survey method in business cycle research. Efforts to develop new economic indicators on the basis of judgement and anticipation data have not yet terminated; many theoretical and methodical questions have still to be answered, and perhaps many have yet to be posed. Accordingly, the following collection of ten essays is not a final stock-taking but an interim report on several paths taken by the IFO Institute in its search for economic indicators. Possibly, some of these will later prove to have been a roundabout way.
