If households form habits over individual goods rather than over a consumption aggregate, the demand a firm faces depends on its own past sales, its pricing problem becomes dynamic, and mark-ups turn …
In a calibrated stochastic growth model where a continuum of households face partially uninsurable employment risk and can self-insure only by holding aggregate capital, the macroeconomic aggregates …
Plant-level data from Chile and the U.S. show that swings in aggregate investment come almost entirely from changes in how many establishments are having an investment spike, not how big those spikes …
Keynes's idea that shocks to the marginal efficiency of investment drive fluctuations is placed inside a neoclassical model in which firms choose how hard to run their capital; a shock that raises the …
PublishedClassicJournal of Money, Credit and BankingPublished Nov 1980
This 1980 paper by Robert Lucas argues that economic theories should be understood as explicit instructions for building fully articulated, artificial "analogue" economies, and traces business cycle …
This 1982 Econometrica paper by Finn Kydland and Edward Prescott builds an equilibrium growth model, fitted to post-war U.S. quarterly data, in which business-cycle fluctuations arise from technology …
PublishedClassicQuarterly Review (Federal Reserve Bank of Minneapolis)Published Dec 1996
Investment projects begin with a long planning phase that consumes very little in the way of resources, and building that phase into an otherwise standard real business cycle model delays the response …