Rios-Rull, J-V;
Zhen, H;
(2020)
Demand Induced Fluctuations.
Review of Economic Dynamics
, 37
(Sup 1)
S99-S117.
10.1016/j.red.2020.06.011.
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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.
| Type: | Article |
|---|---|
| Title: | Demand Induced Fluctuations |
| Open access status: | An open access version is available from UCL Discovery |
| DOI: | 10.1016/j.red.2020.06.011 |
| Publisher version: | https://doi.org/10.1016/j.red.2020.06.011 |
| 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. |
| UCL classification: | UCL UCL > Provost and Vice Provost Offices UCL > Provost and Vice Provost Offices > UCL SLASH UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics |
| URI: | https://discovery.ucl.ac.uk/id/eprint/10100848 |
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