A note on endogenous propagation in one-sector business cycle models with dynamic complementarities
Journal
Macroeconomic Dynamics
Journal Volume
16
Journal Issue
5
Pages
791-801
Date Issued
2012
Author(s)
Wu, S.-J.
Abstract
When the production function includes dynamic complementarities and a Cobb--Douglas form, dynamic complementarities are an endogenous propagation mechanism of shocks. The proposed model explains several stylized facts of aggregate variables of interest, including (i) hump-shaped impulse response functions, (ii) positively autocorrelated growth rates of aggregate variables, and (iii) correlation coefficients of forecastable movements in aggregate variables.
Type
journal article