- Can Real Equilibrium Models Account For The Fluctuations Of The UK Business Cycle?
Can real equilibrium models account for the fluctuations of the UK business cycle?
Related ThemesProductivity, Trade, and Regional Economies
Paper Category Number
The aim of this paper is to test if RBC models can reproduce the fluctuations observed in UK macroeconomic series. Four Equilibrium Business Cycle models will be studied: Hansen (1985), Christiano and Eichenbaum (1992), Burnside et al. (1993) and Fairise and Langot (1994). Following the approach of the Equilibrium Business Cycle Theory, this paper studies whether or not the simulated series from RBC models replicate the volatility, relative volatility, and correlation of UK macroeconomic series. Papers in the literature report only a few second order moments. The present paper presents a wider range of cross correlations of the series. The results highlight the strengths of some of the models, and point deficiencies yet to be corrected if RBC models are to be successful.
Related Blog Posts
UK Trade and the Exchange Rate
24 Apr 2023
6 min read
Why the West is Failing
28 Oct 2022
5 min read
Uncovering Scotland’s Productivity Performance
03 Oct 2022
5 min read
Why is UK Productivity Low and How Can It Improve?
26 Sep 2022
9 min read
Labour Regulation and Productivity in the UK since 1945: Debunking Myths about ‘Disease’, ‘Miracles’ and ‘Puzzles’
16 May 2023
National Institute Economic Review
Finance, Business Investment and Productivity
11 May 2023
UK Economic Outlook Box Analysis
Reindustrialising the United Kingdom
03 May 2023
Vertical and Horizontal Mismatch in the UK: Are Graduates’ Skills a Good Fit for Their Jobs?
21 Mar 2023