Relative Demand Shocks Export

@article{busato-2004, abstract = {This paper introduces the concept of relative demand shocks into a multi-sector dynamic general equilibrium model. Relative demand shocks change the instantaneous structure of preferences. Under relative demand shocks consumer tastes randomly shift across different commodities, as manifested by unexpected relative increases or decreases in the marginal utility of the various consumption goods. There are no exogenous technology (productivity) shocks in the model. There are three main results. First, the model proposes an original theoretical mechanism for generating aggregate fluctuations and sectoral comovement by using inter-sectoral and idiosyncratic shocks. This mechanism is complementary to the standard Real Business Cycle theory. Second, the model is effectively able to reproduce the main stylized facts of the U.S. economy, also those that the standard Real Business Cycle model fails to explain. Third, the model generates a false Solow Residual, even though there is no technological progress in the model. Its size and time series properties are analogous to the actual Solow Residual.}, author = {Busato, Francesco}, citeulike-article-id = {121377}, citeulike-linkout-0 = {http://www.econ.au.dk/afn/abstr04/11.htm}, journal = {Aarhus University, Department of Economics, Working Paper}, keywords = {asset\_pricing, macroeconomics}, posted-at = {2005-03-11 11:47:30}, priority = {2}, title = {Relative Demand Shocks}, url = {http://www.econ.au.dk/afn/abstr04/11.htm}, volume = {11}, year = {2004} }

TY - JOUR ID - busato-2004 L3 - citeulike-article-id:121377 N2 - This paper introduces the concept of relative demand shocks into a multi-sector dynamic general equilibrium model. Relative demand shocks change the instantaneous structure of preferences. Under relative demand shocks consumer tastes randomly shift across different commodities, as manifested by unexpected relative increases or decreases in the marginal utility of the various consumption goods. There are no exogenous technology (productivity) shocks in the model. There are three main results. First, the model proposes an original theoretical mechanism for generating aggregate fluctuations and sectoral comovement by using inter-sectoral and idiosyncratic shocks. This mechanism is complementary to the standard Real Business Cycle theory. Second, the model is effectively able to reproduce the main stylized facts of the U.S. economy, also those that the standard Real Business Cycle model fails to explain. Third, the model generates a false Solow Residual, even though there is no technological progress in the model. Its size and time series properties are analogous to the actual Solow Residual. JF - Aarhus University, Department of Economics, Working Paper TI - Relative Demand Shocks VL - 11 KW - asset_pricing KW - macroeconomics AU - Busato, Francesco PY - 2004/// UR - http://www.econ.au.dk/afn/abstr04/11.htm ER -