Business cycle asymmetries: Loss aversion, sticky prices, and wages

In this chapter, the Smets-Wouters (2003) New Kenesian model is reformulated by introducing the loss aversion utility function developed in chapter two. The purpose of this is to understand how asymmetric real business cycles are linked to asymmetric behavior of agents in a price and wage rigidities...

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Autor Principal: Gómez, Wilman
Formato: Documento de trabajo (Working Paper)
Lenguaje:Español (Spanish)
Publicado: Universidad del Rosario 2014
Materias:
Acceso en línea:http://repository.urosario.edu.co/handle/10336/10971
id ir-10336-10971
recordtype dspace
spelling ir-10336-109712019-09-19T12:37:01Z Business cycle asymmetries: Loss aversion, sticky prices, and wages Gómez, Wilman Producción Economía Ciclos económicos Precios::Aspectos Económicos Análisis de inversiones In this chapter, the Smets-Wouters (2003) New Kenesian model is reformulated by introducing the loss aversion utility function developed in chapter two. The purpose of this is to understand how asymmetric real business cycles are linked to asymmetric behavior of agents in a price and wage rigidities set up. The simulations of the model reveal not only that the loss aversion in consumption and leisure is a good mechanism channel for explaining business cycle asymmetries, but also is a good mechanism channel for explaining asymmetric adjustment of prices and wages. Therefore the existence of asymmetries in Phillips Curve. Moreover, loss aversion makes downward rigidities in prices and wages stronger and also reproduces a more severe and persistent fall of the employment. All in all, this model generates asymmetrical real business cycles, asymmetric price and wage adjustment as well as hysteresis. 2014 2015-10-06T12:50:48Z info:eu-repo/semantics/workingPaper info:eu-repo/semantics/acceptedVersion http://repository.urosario.edu.co/handle/10336/10971 Universidad del Rosario spa info:eu-repo/semantics/openAccess application/pdf Universidad del Rosario Facultad de Economía instname:Universidad del Rosario reponame:Repositorio Institucional EdocUR instname:Universidad del Rosario
institution EdocUR - Universidad del Rosario
collection DSpace
language Español (Spanish)
topic Producción
Economía
Ciclos económicos
Precios::Aspectos Económicos
Análisis de inversiones
spellingShingle Producción
Economía
Ciclos económicos
Precios::Aspectos Económicos
Análisis de inversiones
Gómez, Wilman
Business cycle asymmetries: Loss aversion, sticky prices, and wages
description In this chapter, the Smets-Wouters (2003) New Kenesian model is reformulated by introducing the loss aversion utility function developed in chapter two. The purpose of this is to understand how asymmetric real business cycles are linked to asymmetric behavior of agents in a price and wage rigidities set up. The simulations of the model reveal not only that the loss aversion in consumption and leisure is a good mechanism channel for explaining business cycle asymmetries, but also is a good mechanism channel for explaining asymmetric adjustment of prices and wages. Therefore the existence of asymmetries in Phillips Curve. Moreover, loss aversion makes downward rigidities in prices and wages stronger and also reproduces a more severe and persistent fall of the employment. All in all, this model generates asymmetrical real business cycles, asymmetric price and wage adjustment as well as hysteresis.
format Documento de trabajo (Working Paper)
author Gómez, Wilman
author_facet Gómez, Wilman
author_sort Gómez, Wilman
title Business cycle asymmetries: Loss aversion, sticky prices, and wages
title_short Business cycle asymmetries: Loss aversion, sticky prices, and wages
title_full Business cycle asymmetries: Loss aversion, sticky prices, and wages
title_fullStr Business cycle asymmetries: Loss aversion, sticky prices, and wages
title_full_unstemmed Business cycle asymmetries: Loss aversion, sticky prices, and wages
title_sort business cycle asymmetries: loss aversion, sticky prices, and wages
publisher Universidad del Rosario
publishDate 2014
url http://repository.urosario.edu.co/handle/10336/10971
_version_ 1645141385963110400
score 11,366519