Shock-Dependent Business Cycle Theories
A business cycle model is called shock-dependent if, for reasonable values of the parameters, the generation of cycles relies on an impetus which is not explained in itself by the model. Although most of the models in this chapter are able to display steady and explosive oscillations as well, economic reasoning restricts their valid parameter regimes and only damped oscillations around stable equilibria are allowed. In order to exhibit permanent fluctuations these models require the existence of ongoing exogenous forces which disturb the equilibrating tendencies of the model. Only as an exception and for certain parameter constellations can these models generate permanent oscillations with just one initial exogenous disturbance.
KeywordsBusiness Cycle Capital Stock Parameter Regime Exogenous Shock Business Cycle Theory
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