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Special Report on

Real Business Cycle Theory

real business cycle theory special research report Photo by
Lawrence Summers starts out by comparing the foundations of Keynesian macroeconomic theory to that of astrological science.  That is, both are “premised on the relevance of variables that are in fact irrelevant.”  According to real business cycle economists, Keynesian economics didn’t explain the macro economy because it wasn’t based on microfoundations.  As we have learned in class, RBC models are based off of utility maximization and profit maximization principles, which evolve at the microeconomic level.  Summers brings Prescott’s “Theory Ahead of Business Cycle Measurement” into his ...
. (The four primary economic fluctuations are secular (trend), business cycle, seasonal, and random.) Unlike other leading theories of the business cycle, it sees recessions and periods of economic growth as the efficient response to exogenous changes in the real economic environment. That is, the level of national output necessarily maximizes expected utility , and government should therefore concentrate on the long-run structural policy changes and not intervene through discretionary fiscal or monetary policy designed to actively smooth economic short-term fluctuations. According to RBC theory, business cycles are therefore "
Marginal Revolution: Is Real Business Cycle Theory Dead?
No. Real business cycle theory is alive and kicking.  If we write Y=a*F(K,L) and call "a" technology then an RBC theory is mostly about how fluctuations in "a" change output.  Amusingly, Brad DeLong calls this the great forgetting theory of recessions and indeed it is hard to see how we could forget about technology, thus reducing output in some periods.  But this view takes the term technology too literally. I am in my office every day (L=1), my computer is here every day (K=1) but my output and thus my productivity fluctuates.  Why?  It's not that I forget how to use ... market research, surveys and trends
Berman Post: "Fear The Boom And Bust" Hayek vs. Keynes Rap Anthem
“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.” John Maynard Keynes The General Theory of Employment, Interest and Money “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” F A Hayek The Fatal Conceit " Ian Spencer Dubrowsky said... I saw this a ... market research, surveys and trends


Keynesian Economics: The Concise Encyclopedia of Economics ...
. Although the term has been used (and abused) to describe many things over the years, six principal tenets seem central to Keynesianism. The first three describe how the economy works. 1. A Keynesian believes that aggregate demand is influenced by a host of economic decisions—both public and private—and sometimes behaves erratically. The public decisions include, most prominently, those on monetary and fiscal (i.e., spending and tax) policies. Some decades ago, economists heatedly debated the relative strengths of monetary and fiscal policies, with some Keynesians arguing that is powerless, and some monetarists arguing that is ... industry trends, business articles and survey research
final.tst - TestGen
percent, the quantity of money in 2007 is $75 billion × 1.2 = $90 billion. So. P = [($90 billion × 10)/$500 million] × 100 = 180. Another way to calculate ... industry trends, business articles and survey research
Fiscal, monetary policy and the state of economics
arrived on my desk, I figured it could go one of two ways. One possibility could be that the zombies were Keynesians, discredited in the 1970s but back in favour today. But the cover illustration of trickle-down economics and efficient financial markets illustrates that the Chicago school is deemed to be the haven of the undead. It is an entertaining and thought-provoking book by an Australian academic John Quiggin, which also works as a good summary for non-specialists of how the economics debate has developed (NB the book will not be published until October). The analysis is quite worrying. For those who can recall the 1970s, ... market trends, news research and surveys resources
CITY FOCUS: Fertiliser firm is smelling of roses
A bit like Nick Clegg in the May election, Canadian fertiliser giant Potash suddenly finds itself the belle of the ball and wants to make the most of its new-found status. Potash was catapulted from the obscurity of the Canadian Prairies to the global business stage last week when anglo-Australian mining giant BHP Billiton decided that the future was in plant feed and made a hostile �25bn offer for the world's largest producer. A debate is now raging about just how valuable Potash is. Perhaps unsurprisingly, Potash thinks the anglo-Australian miner's offer is 'wholly inadequate' and has struck up dialogues ... market trends, news research and surveys resources


Q-Theory and Real Business Cycle Analytics 1
“Household Production in Real Business Cycle Theory.” In. Thomas F. Cooley, ed., Frontiers in Business Cycle Research. Princeton, NJ: Princeton University ... technology research, surveys study and trend statistics
Time Series Decomposition and Measurement of Business Cycles ...
of these points have been recognized by real business cycle (RBC) theorists; ..... Zarnowitz, V. (1992), Business Cycles: Theory, History, Indicators, ... technology research, surveys study and trend statistics
Real Business Cycle Models: Past, Present, and Future∗
business cycle and growth theory by insisting that business cycle models must .... The Behavior of Asset Prices Real business cycle models are arguably suc- ...
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Real business cycle theory (macroeconomic school)? - Yahoo! Answers
Business cycle at AllExperts
involves shifts over time between periods of relatively rapid growth of output (recovery and prosperity), alternating with periods of relative stagnation or decline (contraction or recession ). These fluctuations are often measured using the real gross domestic product . To call those alternances "cycles" is rather misleading as they don't tend to repeat at fairly regular time intervals. Most observers find that their lengths (from peak to peak, or from trough to trough) vary, so that cycles are not mechanical in their regularity. Since no two cycles are alike in their details, some economists dispute the ...