Farmer, Roger E. A. (2016) The evolution of endogenous business cycles. Macroeconomic Dynamics, 20 (2). pp. 544-557. doi:10.1017/S1365100514000248

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Abstract

This paper distinguishes two kinds of endogenous business cycle models: EBC1 models, which display dynamic indeterminacy, and EBC2 models, which display steady-state indeterminacy. Both strands of the literature have their origins in the sunspot literature that developed at the University of Pennsylvania in the 1980s. I argue that EBC1 models are part of the evolution of modern macroeconomics that has classical roots dating back to the 1920s. EBC2 models provide a microfoundation for one of the most important ideas to emerge from Keynes's (1936) General Theory of Employment, Interest and Money: that high involuntary unemployment can persist as part of the steady-state equilibrium of a market economy.

Item Type:	Journal Article
Subjects:	H Social Sciences > HB Economic Theory
Divisions:	Faculty of Social Sciences > Economics
Library of Congress Subject Headings (LCSH):	Business cycles -- Mathematical mdoels, Macroeconomics -- Mathematical models, University of Pennsylvania, Keynes, John Maynard, 1883-1946 -- Influence
Journal or Publication Title:	Macroeconomic Dynamics
Publisher:	Cambridge University Press
ISSN:	1365-1005
Official Date:	March 2016
Dates:	Date Event March 2016 Published 3 July 2014 Available 13 January 2014 Accepted
Volume:	20
Number:	2
Page Range:	pp. 544-557
Identifier:	10.1017/S1365100514000248
Status:	Peer Reviewed
Publication Status:	Published
Access rights to Published version:	Restricted or Subscription Access

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