In most manufacturing industries output is adjusted in a lumpy way along three margins: shiftwork, weekend work, and closing a plant temporarily down. We incorporate such decisions into a dynamic general equilibrium model and study: (i) if such micro-level nonconvexities magnify business cycles;...

This paper examines the time varying impact of technology news shocks on the U.S. economy during the Post-World War II era using a structural time varying parameter vector autoregressive (TVP-VAR) model. The identification restrictions are derived froma standard new Keynesian dynamic stochastic...

The Hodrick-Prescott (HP) filter is a commonly used method, particularly in potential output studies. However its suitability depends on a number of conditions. Very small open economies do not satisfy these as their macroeconomic series exhibit pronounced trends, large fluctuations and...

This paper incorporates home production into a real business cycle (RBC) model of a small open economy to provide a parsimonious explanation of the empirical pattern of international business cycles in developed economies and emerging markets. It is well known in the literature that in order for...

From 1960-2009, the U.S. current account balance has tended to decline during expansions and improve in recessions. We argue that trend shocks to productivity can help explain the countercyclical U.S. current account. Our framework is a two-country, two-good real business cycle (RBC) model in...

This paper investigates the transmission mechanism of government spending shocks in an estimated dynamic general equilibrium model. I construct a New Keynesian model with distortionary labour and capital taxes and with references that allow the wealth effect on labour supply to vary in strength....

Kaleckian models are widely used for macroeconomic analysis due to their flexibility and simplicity. Sraffians counter that the Kaleckian model fails to capture a central fact of modern economies, the existence and importance of intermediate consumption. The critique is correct, but as the...

We study jointly the roles of aggregate and idiosyncratic uncertainty shocks in driving business cycle fluctuations. By decomposing total stock return volatility of over 20,000 publicly-listed US firms from 1962 to 2012, we construct separate indices for aggregate and idiosyncratic uncertainty,...

This paper analyses the dynamics and significance of supply sectors in planning the economic policy, in particular the impact (manufacturing, agriculture and services) on economic growth through 1970 – 2011 and three cohorts. In these sense, it uses the following tools: co-movements and multi...

Modern economics assumes that in the long run an economy develops in a balanced way, with full employment of resources and a constant inflation rate. The output level thereby achieved is called „potential output‟. Knowing the extent of the output gap, or the deviation from this equilibrium,...