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Demand induced fluctuations
- Source :
- Review of Economic Dynamics. 37:S99-S117
- Publication Year :
- 2020
- Publisher :
- Elsevier BV, 2020.
-
Abstract
- We build a variation of the neoclassical growth model in which households increased desire to save generate recessions. Our economy features three departures from the standard model: (1) goods markets (for nontradables) require active search from households wherein increases in consumption expenditures increase measured productivity; (2) adjustment costs make it difficult to expand the tradable goods sector by reallocating factors of production from nontradables to tradables; (3) labor markets have Nash bargaining wage setting and Mortensen-Pissarides search and matching frictions labor markets. These departures provide a novel quantitative theory to explain recessions like those in southern Europe without relying on technology shocks.
Details
- ISSN :
- 10942025
- Volume :
- 37
- Database :
- OpenAIRE
- Journal :
- Review of Economic Dynamics
- Accession number :
- edsair.doi...........d1bb771b2da3d189e1c89eb6be505ec4