Gomme, Paul; Ravikumar, B.; Rupert, Peter - Department of Economics, Concordia University - 2008
A widely cited failing of real business cycle models is their inability to account for the cyclical patterns of … growth model. This paper constructs a measure of the return to business capital for the U.S. The S&P 500 return is roughly … six times more volatile than the return to business capital. Owing to the equivalence between the returns to capital and …