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Alain PAQUET LYONNET (UQAM) – “Modelling and Implications of Endogenous Schumpeterian Growth for Business Cycles in a New Keynesian DSGE Model”
October 23, 2017, 12:15 pm - 1:30 pm
The Macroeconomics Seminar: Every Monday at 12:15 pm.
Time: 12:15 pm – 1:30 pm
Date: 23th of October 2017
Place: Room 3001.
Alain PAQUET (UQAM) – “Modelling and Implications of Endogenous Schumpeterian Growth for Business Cycles in a New Keynesian DSGE Model””
Despite the development of modern endogenous growth models, commonly used DSGE models are based on an exogenous neoclassical long-term growth and focus only on the fluctuations around that trend growth. In contrast, we propose a model of economic fluctuations with New Keynesian nominal rigidities and common shocks that builds in the features of a Schumpeterian endogenous growth model to capture the interactions between an economy’s trend growth and its cyclical fluctuations. The innovation process is embedded in the intermediate production sector thus generating a dynamic not commonly seen in New Keynesian models, while conserving nominal wage and price stickiness and studying the impact of productivity, spillover and monetary shocks.
We show that endogenous decisions to invest in R&D have implications that impact the likelihood of innovating and pushing the technological frontier, while adding a significant transmission channel. The implications of the model on the business cycle characteristics (such as volatility, co-movements and persistence in real variables and inflation) are highlighted. Finally, our hybrid model highlights and addresses new challenges at the modelling and simulation stages.
Julien PRAT (CREST )
Address : ENSAE ParisTech 5, avenue Henry Le Chatelier 91120 Palaiseau, How to come?