A Real-Business-Cycle Model with Endogenous Discounting and a Government Sector

Authors

  • Aleksandar Vasilev University of Lincoln

DOI:

https://doi.org/10.14195/2183-203X_54_4

Keywords:

Business cycles, Uzawa preferences, endogenous discounting, Bulgaria

Abstract

We introduce an endogenous discount factor as in Uzawa (1968) and Schmitt-Grohe and Uribe (2003) into a real-business-cycle setup with government sector and Greenwood et al. (1988) preferences. We calibrate the artificial economy to Bulgarian data for the period after the currency board arrangement was introduced (1999-2018). In particular, we look into the quantitative importance of endogenous discounting for the propagation of cyclical fluctuations in Bulgaria. We conclude that the presence of an endogenous discount factor improves the model, and that the extended setup performs better than the standard RBC model framework with a constant discount factor (e.g. Vasilev, 2009).

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Published

2022-06-02

Issue

No. 54 (2022)

Section

Articles

License

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows sharing the work with recognition of authorship and initial publication in Antropologia Portuguesa journal.