Basu, Susanto; Fernald, John G. - 2009
, if any, modern
macroeconomic models would imply that, at business cycle frequencies, potential output is a
smooth …) frictions and shocks were unchanged.
2
In a flexible-price real-business-cycle
model, where prices adjust instantaneously … predominantly driven by aggregate demand impulses.”
Solow (1997) recognizes that real-business-cycle theories take a different …