Heterogeneity and Aggregate Fluctuations

This paper applies business cycle accounting methodology to analyze the sources of aggregate fluctuations in Thai economy, especially during the recent severe recessions in 1997–1998 and 2008–2009. This exploration helps researchers uncover possible shocks and frictions that drive business cycle in a small and open economy within a minimal model set-up. Under this methodology, a fluctuation in aggregate output can be accounted for by exogenous time-varying wedges, namely efficiency wedge, investment wedge, labor wedge, government wedge, etc. This study found that the efficiency wedge is essential in accounting for aggregate output, consumption and investment fluctuation, while the bond wedge, which only present in an open economy setting, is a prime factor in accounting for movement in current accounts. I conducted counterfactual experiments to see what accounts for the output drop during recent recessions. I find that the efficiency wedge played a key role in recent recessions in Thailand, while the investment wedge was accounted for slow economic recovery after the recessions.

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Restrictions on Financial Intermediaries and Implications for Aggregate Fluctuations: Canada and the United States 1870-1913

NBER Macroeconomics Annual ◽

10.1086/654115 ◽

1989 ◽

Vol 4 ◽

pp. 303-340 ◽

Cited By ~ 5

Author(s):

Stephen D. Williamson

Keyword(s):

United States ◽

The United States ◽

Financial Intermediaries ◽

Aggregate Fluctuations

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Aggregate fluctuations with increasing returns to specialization and scale

Journal of Economic Dynamics and Control ◽

10.1016/0165-1889(95)00868-3 ◽

1996 ◽

Vol 20 (4) ◽

pp. 627-656 ◽

Cited By ~ 61

Author(s):

Michael B. Devereux ◽

Allen C. Head ◽

Beverly J. Lapham

Keyword(s):

Increasing Returns ◽

Aggregate Fluctuations

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News-Driven Business Cycles: Insights and Challenges

Journal of Economic Literature ◽

10.1257/jel.52.4.993 ◽

2014 ◽

Vol 52 (4) ◽

pp. 993-1074 ◽

Cited By ~ 94

Author(s):

Paul Beaudry ◽

Franck Portier

Keyword(s):

Business Cycles ◽

Business Cycle ◽

Empirical Evidence ◽

Economic Fluctuations ◽

Aggregate Fluctuations ◽

Business Cycle Fluctuations ◽

Widespread Belief ◽

Way Of Thinking ◽

The Many

There is a widespread belief that changes in expectations may be an important independent driver of economic fluctuations. The news view of business cycles offers a formalization of this perspective. In this paper we discuss mechanisms by which changes in agents' information, due to the arrival of news, can cause business cycle fluctuations driven by expectational change, and we review the empirical evidence aimed at evaluating their relevance. In particular, we highlight how the literature on news and business cycles offers a coherent way of thinking about aggregate fluctuations, while at the same time we emphasize the many challenges that must be addressed before a proper assessment of the role of news in business cycles can be established. (JEL D83, D84, E13, E32, O33)

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