A R&D Based Real Business Cycle Model

Author

Ka Wai Terence Fung, Graduate Center, City University of New YorkFollow

Date of Degree

2011

Document Type

Dissertation

Degree Name

Ph.D.

Program

Economics

Advisor

Jonathan Conning

Committee Members

Peter Chow

Thom Thurston

Subject Categories

Economics

Abstract

The New Keynesian Real Business Cycle model with staggered price adjustment is augmented with a R&D producing sector. Two sources of economic shocks are separately considered, namely random participation (perturbances to value of alternative investment opportunities in another sector) and financial intermediation (shocks to the cost of raising capital in the financial intermediation market). We find that, when comparing to the baseline model, both random participation and financial intermediation models can explain pro-cyclical R&D spending. Additionally the investment oversensitivity problem is corrected. However, only the financial intermediation model is consistent with the observed finding that the volatility of R&D is larger than that of investment and output.

Comments

Digital reproduction from the UMI microform.

Recommended Citation

Fung, Ka Wai Terence, "A R&D Based Real Business Cycle Model" (2011). CUNY Academic Works.
https://academicworks.cuny.edu/gc_etds/1766