Hostname: page-component-8448b6f56d-sxzjt Total loading time: 0 Render date: 2024-04-24T18:34:07.779Z Has data issue: false hasContentIssue false
  • English
  • Français

A NOTE ON THE REAL EFFECTS OF MONETARY SHOCKS: A LIMITED PARTICIPATION MODEL

Published online by Cambridge University Press:  07 June 2012

Pedro J. Gutiérrez  and
Carlos R. Palmero
Pedro J. Gutiérrez
Affiliation:
Universidad de Valladolid
Carlos R. Palmero*
Affiliation:
Universidad de Valladolid
*
Address correspondence to: Carlos R. Palmero, Facultad de Ciencias Económicas y Empresariales, Universidad de Valladolid, E 47011 Valladolid, Spain e-mail: cpalmero@eco.uva.es.
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper presents a monetary stochastic general equilibrium model that allows the real cyclical movements of the economy to be explained as a consequence of exogenous monetary, public spending, and technology shocks. The model is calibrated and simulated, and its accuracy in replicating the cyclical movements in the real variables is compared with that of the standard real business cycle (RBC) model. We find that our model fits the observed data better than the existing RBC models, especially for the labor market.

Keywords

Limited Participation ModelReal Business Cycle ModelMonetary PolicyLabor Market Puzzles
Type
Notes
Information
Macroeconomic Dynamics , Volume 17 , Issue 4 , June 2013 , pp. 936 - 946
Copyright
Copyright © Cambridge University Press 2012 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Bilbiie, F.O., Ghironi, F., and Melitz, M.J. (2007) Endogenous Entry, Product Variety, and Business Cycles. NBER working paper 13646.CrossRefGoogle Scholar
Chari, V.V., Jones, L.E., and Manuelli, R.E. (1995) The growth effects of monetary policy. Federal Reserve Bank of Minneapolis Quarterly Review 19, 18–32.Google Scholar
Chari, V.V., Kehoe, P.J., and McGrattan, E. (2007) Business cycle accounting. Econometrica 75, 781–836.CrossRefGoogle Scholar
Christiano, L.J. and Eichenbaum, M. (1992a) Current real-business-cycle theories and aggregate labor-market fluctuations. American Economic Review 82, 402–417.Google Scholar
Christiano, L.J. and Eichenbaum, M. (1992b) Liquidity effects and the monetary transmission mechanims. American Economic Review 82, 346–353.Google Scholar
Clarke, A.J. and Johri, A. (2009) Procyclical Solow residuals without technology shocks. Macroeconomic Dynamics 13, 366–389.CrossRefGoogle Scholar
Clower, R.W. (1967) A reconsideration of the microfoundations of monetary theory. Western Economic Journal 6, 1–9.Google Scholar
Cooley, T.F. and Prescott, E.C. (1995) Economic growth and business cycles. In Cooley, T.F. and Prescott, E.C. (eds.), Frontiers of Business Cycle Research, pp. 1–38. Princeton, NJ: Princeton University Press.CrossRefGoogle Scholar
Fuerst, T.S. (1992) Liquidity, loanable funds, and real activity. Journal of Monetary Economics 29, 3–24.CrossRefGoogle Scholar
Gutiérrez, P.J. (2006) Short-run and long-run effects of monetary policy in a general equilibrium model with bank reserves. Economic Modelling 23, 597–621.CrossRefGoogle Scholar
Gutiérrez, P.J. and Palmero, C.R. (2008) Central bank reserves requirement, monetary shocks, and labour market fluctuations. In Shinnick, E. (ed.), New Public Finance and Market Issues, Chap. 11, Infer Research Perspectives, Vol. 4. Berlin: LIT Verlag.Google Scholar
Hansen, G.D. and Wright, R. (1992) The labor market in real business cycle theory. Federal Reserve Bank of Minneapolis Quarterly Review 16, 2–12.Google Scholar
King, R.G. and Rebelo, S.T. (2000) Resuscitating real business cycles. NBER working paper 7534.CrossRefGoogle Scholar
King, R.G. and Watson, M.W. (1996) Money, prices, interest rates and the business cycle. Review of Economics and Statistics 78, 35–53.CrossRefGoogle Scholar
Lewis, V. (2009) Business cycle evidence on firm entry. Macroeconomic Dynamics 13, 605–624.CrossRefGoogle Scholar
Lucas, R. (1980) Equilibrium in a pure currency economy. Economic Inquiry 18, 203–220.CrossRefGoogle Scholar
Lucas, R. (1982) Interest rates and currency prices in a two-country world. Journal of Monetary Economics 10, 335–359.CrossRefGoogle Scholar
Lucas, R. (1990) Liquidity and interest rates. Journal of Economic Theory 50, 237–264.CrossRefGoogle Scholar
Ohanian, L.E. (2010) The economic crisis from a neoclassical perspective. Journal of Economic Perspectives 24, 45–66.CrossRefGoogle Scholar
Prescott, E.C. (1986) Response to a skeptic. Federal Reserve Bank of Minneapolis Quarterly Review 14, 28–33.Google Scholar