Three Essays on Real Business Cycles
Date Issued
2014
Date
2014
Author(s)
Chen, Kuan-Jen
Abstract
This dissertation incorporates some new channels into the real business cycle (RBC) model to interpret the empirical pattern of business cycles. First, we propose a new channel of on-the-job learning to explain the positive co-movement between consumption and employment following good news about future productivity. It is found that the new recruits can generate an additional stream of output production in all future periods, and the firm’s labor demand is thus characterized by the forward-looking property. When such a channel is paired with investment adjustment costs and the endogenous capacity utilization rate, this dissertation provides a plausible explanation for simultaneous booms in current consumption, investment, output, and employment to match the empirical evidence under the news shock. Second, this dissertation offers a plausible explanation of the major features of business cycles in the small open economy by considering home production. The presence of home production introduces substitutability between market consumption and home consumption, which in turn generates a high volatility in market consumption in accordance with the data, even in the presence of a sizable income effect on labor supply. Moreover, given that home production is more prevalent in emerging markets than in developed economies, the model is also able to replicate empirical differences between emerging markets and developed economies in the volatility of market consumption and the volatility/countercyclicality of the trade balance. Finally, we introduce research and development (R&D) into a real business cycle model of a small open economy to capture different patterns of business cycles between developed economies and emerging markets. Based on this model, it is found that two stylized facts investigated from the empirical statistics are crucial for the interpretation of emerging market business cycles: (1) The volatility of foreign technology in the emerging market is higher than that in the developed economy; (2) The R&D expenditure to GDP ratio in the emerging market is less than that in the developed economy.
Subjects
景氣循環
預期驅動的景氣循環
在職學習
小型開放經濟
新興市場
家戶生產
研究與發展
Type
thesis
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