The Evolution of Endogenous Business Cycles

Roger Farmer

No 9080, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper distinguishes between two kinds of Endogenous Business Cycle models, and discusses the evolution from first generation EBC1 models to second generation EBC2 models. I argue that EBC1 models, which display dynamic indeterminacy, are part of the evolution of modern macroeconomics that has classical roots dating back to the 1920s. EBC2 models, which display steady-state indeterminacy, are a more radical departure from the classical Real Business Cycle model; they represent a return to one of the most important ideas to emerge from Keynes? (1936) General Theory; that high involuntary unemployment can persist as part of the steady-state equilibrium of a market economy.

Keywords: Indeterminacy; Self-fulfilling propcheices; Sunspots; Unemployment (search for similar items in EconPapers)
JEL-codes: B22 E20 E32 (search for similar items in EconPapers)
Date: 2012-08
New Economics Papers: this item is included in nep-hpe and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://cepr.org/publications/DP9080 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: THE EVOLUTION OF ENDOGENOUS BUSINESS CYCLES (2016)
Working Paper: The Evolution of Endogenous Business Cycles (2012)
Working Paper: The Evolution of Endogenous Business Cycles (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:9080

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP9080

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().