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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| Formato: | Documento de trabajo (Working Paper) |
| Lenguaje: | Español (Spanish) |
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Universidad del Rosario
2014
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| Acceso en línea: | http://repository.urosario.edu.co/handle/10336/10971 |
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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 |
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EdocUR - Universidad del Rosario |
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DSpace |
| language |
Español (Spanish) |
| topic |
Producción Economía Ciclos económicos Precios::Aspectos Económicos Análisis de inversiones |
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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 |
12,131701 |