Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/209990
Authors: 
Furlanetto, Francesco
Natvik, Gisle James
Seneca, Martin
Year of Publication: 
2011
Series/Report no.: 
Working Paper No. 2011/14
Abstract: 
Recent studies find that shocks to the marginal efficiency of investment are a main driver of business cycles. Yet, they struggle to explain why consumption co-moves with real variables such as investment and output, which is a typical feature of an empirically recognizable business cycle. In this paper we show that within a conventional business cycle model, rule-of-thumb consumption provides a straightforward explanation of macroeconomic co-movement after a shock to the marginal efficiency of investment.
Subjects: 
investment shocks
consumption
rule-of-thumb consumers
nominal rigidities
co-movement
JEL: 
E32
Persistent Identifier of the first edition: 
ISBN: 
978-82-7553-624-0
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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