Publications and Research
Document Type
Working Paper
Publication Date
2021
Abstract
In this paper, I developed a standard neoclassical growth model to understand the importance of investment shock on business cycle fluctuation. In addition to investment shock, my model includes technology shock too. Using the Simulation-based PEA (Parameterized expectations algorithm) approach, i estimate the Model. The model provides evidence that investment shocks constitute a significant force behind U.S. business cycles. Model in this paper reaffirms the comovement of consumption and investment with output and accurately predicts the Investment to output,capital to output ratio and the labour for the US economy.