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Gold rush fever in business cycles

Beaudry, P; Collard, F; Portier, F; (2011) Gold rush fever in business cycles. Journal of Monetary Economics , 58 (2) pp. 84-97. 10.1016/j.jmoneco.2011.01.001. Green open access

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Abstract

A flexible price model of the business cycle is proposed, in which fluctuations are driven primarily by inefficient movements in investment around a stochastic trend. A boom in the model arises when investors rush to exploit new market opportunities even though the resulting investments simply crowd out the value of previous investments. A metaphor for such profit driven fluctuations are gold rushes, as they are periods of economic boom associated with expenditures aimed at securing claims near new found veins of gold. An attractive feature of the model is its capacity to provide a simple structural interpretation to the properties of a standard consumption and output Vector Autoregression.

Type: Article
Title: Gold rush fever in business cycles
Open access status: An open access version is available from UCL Discovery
DOI: 10.1016/j.jmoneco.2011.01.001
Publisher version: https://doi.org/10.1016/j.jmoneco.2011.01.001
Language: English
Additional information: This version is the author accepted manuscript. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Business Cycle, Investment, Imperfect Competition
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10040001
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