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lecture2 - Lecture 2 Technology Shocks and the Business...

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Lecture 2 Technology Shocks and the Business Cycle
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ECN/APEC 7240 II - 2 Business Cycle Regularities Real GDP fluctuates irregularly. But other economic variables have similar fluctuations—they comove with GDP. “With respect to qualitative behavior of comovements among series, business cycles are all alike.” -Robert Lucas
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ECN/APEC 7240 II - 3 Consumption Fluctuations
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ECN/APEC 7240 II - 4 Investment Fluctuations
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ECN/APEC 7240 II - 5 Employment Fluctuations
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ECN/APEC 7240 II - 6 Quantitative Summary
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ECN/APEC 7240 II - 7 Business Cycle Facts
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ECN/APEC 7240 II - 8 The Production Function Aggregate output at t is Factors of production: K ( t ) = capital L ( t ) = labor A ( t ) = technology This specification assumes technology is labor-augmenting or Harrod-neutral. )). ( ) ( ), ( ( ) ( t L t A t K F t Y =
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ECN/APEC 7240 II - 9 Constant Returns to Scale For any x , y , λ 0, F ( λ x , λ y ) = λ F ( x , y ). Economy is big enough so differentiation and specialization of labor and capital are unimportant.
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