Danthine, Jean-Pierre; Donaldson, John B. - In: Review of Economic Studies 69 (2002) 1, pp. 41-64
This paper proposes a dynamic GE model with standard business cycle properties that also achieves a satisfactory replication of the major financial stylized facts. We ride on two major ideas. First, we show that operating leverage, originating in the priority status of wage claims given the...
