Growth, volatility and stabilisation policy in a DSGE model with nominal rigidities and learning-by-doing |
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Authors: | The Anh Pham |
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Institution: | (1) School of Social Sciences, University of Manchester, Manchester, UK |
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Abstract: | The paper aims to analyse the question of how cyclical fluctuations might affect long run growth. The analysis is based on
a dynamic stochastic general equilibrium model for an imperfectly competitive economy with fully optimising agents. The model
is characterized with nominal rigidities, an endogenous technology, and multiple shocks. It predicts either a negative or
positive relationship between short run volatility and long run growth depending on the source of shocks and the reaction
of the central bank. The model also shows that, even when the negative relationship exits the policy that is designed to stabilise
short run volatility may either increase or decrease growth depending on the source of shocks. |
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Keywords: | |
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