scholarly journals A business-cycle model with a modified cash-in-advance feature, government sector and one-period nominal wage contracts: the case of Bulgaria

2020 ◽  
Vol 6 (1) ◽  
pp. 19
Author(s):  
Aleksandar Vasilev
Keyword(s):  
Business Cycle ◽  
Nominal Wage ◽  
Cycle Model ◽  
Government Sector ◽  
Wage Contracts ◽  
Business Cycle Model ◽  
Cash In Advance

A business-cycle model with a modified cash-in-advance feature, government sector and one-period nominal wage contracts: the case of Bulgaria

scholarly journals A business-cycle model with monopolistically competitive firms and Calvo wages: lessons for Bulgaria (1999–2018)

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Aleksandar Vasilev
Keyword(s):  
Labor Market ◽  
Business Cycle ◽  
Monopolistic Competition ◽  
Nominal Wage ◽  
Cycle Model ◽  
Content Type ◽  
Stock Investment ◽  
Model Match ◽  
Business Cycle Model ◽  
Nominal Wage Rigidity

PurposeThe author augments an otherwise standard business-cycle model with a rich government sector and adds monopolistic competition in the product market and rigid prices, as well as rigid wages a la Calvo (1983) in the labor market.Design/methodology/approachThis specification with the nominal wage rigidity, when calibrated to Bulgarian data after the introduction of the currency board (1999–2018), allows the framework to reproduce better observed variability and correlations among model variables and those characterizing the labor market in particular.FindingsAs nominal wage frictions are incorporated, the variables become more persistent, especially output, capital stock, investment and consumption, which help the model match data better, as compared to a setup without rigidities.Originality/valueThe computational experiments performed in this paper suggest that wage rigidities are a quantitatively important model ingredient, which should be taken into consideration when analyzing the effects of different policies in Bulgaria, which is a novel result.

scholarly journals The Role of Energy in a Real Business Cycle Model with an Endogenous Capital Utilization Rate in a Government Sector: Lessons from Bulgaria (1999–2016)

2019 ◽  
Vol 5 (52) ◽  
pp. 130-141
Author(s):  
Aleksandar Vasilev
Keyword(s):  
Business Cycle ◽  
Physical Capital ◽  
Utilization Rate ◽  
Real Business Cycle ◽  
Cycle Model ◽  
Model Framework ◽  
Capital Utilization ◽  
Government Sector ◽  
Business Cycle Model ◽  
Real Business Cycle Model

Abstract We introduce a pro-cyclical endogenous utilization rate of physical capital stock into a real business cycle model augmented with a government sector in detail. We calibrate the model to Bulgarian data for the period following the introduction of the currency board arrangement (1999–2016). We investigate the quantitative importance of the endogenous depreciation rate and the capital utilization mechanism working through the use of energy for cyclical fluctuations in Bulgaria. In particular, a positive shock to energy prices in the model works like a negative technological shock. Allowing for variations in factor utilization and the presence of energy as a factor of production improves the model performance against data, and in addition this extended setup dominates the standard RBC model framework with constant depreciation and a fixed utilization rate of physical capital (e.g., Vasilev (2009)).

Sign in / Sign up

Export Citation Format

Share Document