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- W2897617274 abstract "Abstract We offer a partial equilibrium perspective on the behavior of consumption in dynamic stochastic general equilibrium (DSGE) models. We consider a benchmark dynamic general equilibrium model and show that a standard calibration implies that the real interest rate is essentially fixed. One manifestation of this feature is that, with separable preferences, the reaction of consumption to total factor productivity (TFP) shocks is flat: the random‐walk permanent income hypothesis holds almost exactly, pretty much as in a partial equilibrium consumption‐savings problem. These results help explain the prominent role of aggregate demand, and how it is achieved, in modern DSGE analysis." @default.
- W2897617274 created "2018-10-26" @default.
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- W2897617274 date "2018-10-21" @default.
- W2897617274 modified "2023-10-17" @default.
- W2897617274 title "Where is the GE? Consumption Dynamics in DSGEs" @default.
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- W2897617274 doi "https://doi.org/10.1111/jmcb.12570" @default.
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