Testing a model of real business cycles for Bolivia
DOI:
https://doi.org/10.35319/rwtmx065Keywords:
Real Business Cycles, Emerging economies, Simulation, Macroeconomic Analyses of Economic DevelopmentAbstract
The usefulness of Real Business Cycle Models is widely discussed in emerging economies, due to the neoclassical assumptions in which they are based, as well as the periods of time in which the impacts should be analyzed. In order to test the relevance of this model in an emerging economy such as Bolivia; a model with three shocks (employment, technology and investment) was applied, assuming a closed economy, verifying its impacts on output, employment, consumption, capital, investment, real wages and real interest rate. Some results are in line with what economic theory predicts, while others depart from it, showing signs that such models would not be the most optimal as instruments of policy in emerging economies.
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References
Aguiar M. & Gita G. (2007). Emerging Market Business Cycles: The Cycle Is the Trend. Journal of Political Economy. 115(1), 69–102.
Garcia, C., Pancrazi, R., Uribe, M. (2010). Real Business Cycles in Emerging Countries?. American Economic Review. 2510–2531.
Garcia, C., Pancrazi, R. & Uribe, M. (2009). Appendix to Real Business Cycles in Emerging Countries?. Columbia University and NBER.
Smets, F. & Wouters, R. (2007). Shocks and Frictions in US Business Cycles a Bayesian DSGE Approach. European Central Bank.
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