A Real Model of Cyclical Growth
This chapter develops and estimates a model of cyclical growth. The model is presented in Section 9.1. Sections 9.2 and 9.3 give a qualitative analysis of the model. Section 9.4 modifies the basic model by allowing for a change in the rate of technical progress, which is essential in the empirical application. Section 9.5 contains some details regarding the estimation. The empirical results are given in Section 9.6. The appendices treat the technical details of the linearization procedure, which is necessary for estimation and for stability analysis.
KeywordsReal Wage Real Interest Rate Capacity Utilization Fixed Capital Linearization Error
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