Real business cycles, Microeconomics

Assignment Help:

REAL BUSINESS CYCLES:

The extent of this module is partly indicated in the title. It is about real business cycle (RBC) theory. In addition, it exposes you to New Classical Business Cycle theory, a specie which belongs to the same genus that spawns the RBC approach. The literature in the field is technical, so we will work through some elementary, but not trivial, treatments of the subject and strongly recommend plunging into the classics in the area, once some quantitative skills have been imbibed. 

The present Unit connects, as promised and naturally, from the study of business cycles in the previous Unit. Intimately, however, the springs of this Unit are less cycles as developed there and your exposure to the traditional theory of unemployment, and more your education in microeconomics that ends with the theory of general equilibrium. The perspective of the former is that business cycles emerge naturally in the evolution of a capitalist economy as a system. Particularly, the connection between the short-run dynamics of traditional theories of employment and the cycles that emerge from their long-run extension would be written along aggregative lines. The painstaking work of pioneers like Wesley Clair Mitchell and others consisted in closely scrutinising the time series of important macroeconomic magnitudes and tracing short and long cycles therein. The strategy of the latter, on the other hand, is to develop the story of market-clearing over time to account for the phenomenon of fluctuations and cycles.  A distinction is made between the two notions. Fluctuations might not present the periodicity indicated in the word 'cycles'. Real business cycles are fluctuations generated by shocks which might not reflect the rhythms of ebb and flow of classical cycles. New Classical Business Cycle research, on the other hand, is oriented towards explaining the familiar pattern of boom and slump, one following the other in regular succession. Perhaps for this reason, the role of money and finance in both approaches might be distinguished. In the former, the  shocks referred to are changes in technology and tastes. Money is a veil. On the other hand, money and finance are part of the model of expansion and contraction developed by New Classical Business Cycle theorists.    


Related Discussions:- Real business cycles

Define shortages occur when price controls are in effect, Why is it true th...

Why is it true that shortages usually occur mainly when price controls are in effect? In the nonexistence of price controls the shortage generally goes away quickly because price

Inflation, Inflation is not possible under the gold standard.” Is this stat...

Inflation is not possible under the gold standard.” Is this statement true, false, or uncertain? Explain your answer.

Tax policy implementation, Tax Policy Implementation:   Take, e.g., the...

Tax Policy Implementation:   Take, e.g., the case of tax policy. It attempted to raise resources by a combination of direct and indirect taxes to finance a large part of increa

Economics, Ask questiowhat are the importance of the branches of economics

Ask questiowhat are the importance of the branches of economics

Demand elastic- inelastic or unit elastic, Questions (i)   You are an i...

Questions (i)   You are an industry analyst. Last year, the production cost of Microprocessor increased remarkably due to labor unionization. Nevertheless, the industry experie

PPC, WHAT IS PPC

WHAT IS PPC

Non-accelerating-inflation rate of unemployment, Non-Accelerating-Inflation...

Non-Accelerating-Inflation Rate of Unemployment (NAIRU): This theory is a variant of neoclassical natural rate of unemployment. As in original natural rate theory, NAIRU advocates

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd