Policy function iteration methods for solving and analyzing dynamic stochastic general equilibrium models are powerful from a theoretical and computational perspective. Despite obvious theoretical appeal, significant startup costs and a reliance on grid-based methods have limited the use of...

This paper investigates the relative importance of foreign and domestic shocks for the Swedish postwar business cycle in a neoclassical stochastic growth model of a small open economy. We extend previous work in the literature by allowing for stochastic fiscal policy, since recent research has...

Growth rates of macro aggregates are more persistent than technology growth in data. We develop a theory that accounts for this observation. In the model there are two types of shocks affecting the growth rate of technology, one transitory and another persistent, but agents do not observe them...

The present paper is structured as a brief guide focused on the rendering of the output generated by Dynare, a specific tool of Matlab, when implementing a Dynamic Stochastic General Equilibrium model for impulse-response function analysis purpose. After a concise description of a standard Real...

In this paper, we propose a theoretical framework to investigate the impact of conflicts and wars on key macroeconomic aggregates and welfare. Using a panel data with 12 countries from 1875 onwards we first show that consumption drops more than output during conflicts, while the opposite is true...

This paper proposes a conceptual framework to investigate the impact of military conflicts on business cycles, as well as defense policies through enrolment mechanisms. Our framework is a variation of a Real Business Cycle model first proposed by Hercowitz and Sampson (1991) that admits explicit...

Recent work on the effects of permanent technology shocks argue that the basic RBC model cannot account for a negative correlation between hours worked and labour productivity. In this Paper, I show that this conjecture is not necessarily correct. In the basic RBC model, I find that hours worked...

In this paper, I try to shed some new light on the "puzzle" why the Lucas critique, belived to be important by most economists, seems to have received very little empirical support. I use a real business cycle model to examine the properties of the super exogeneity test, which is used to detect...

Recent work on the effects of permanent technology shocks argue that the basic RBC model cannot account for a negative correlation between hours worked and labor productivity. In this paper, I show that this conjecture is not necessarily correct. In the basic RBC model, I find that hours worked...