Liquidity Constraints, Heterogeneous Households and Sunspots Fluctuations

Jean-Paul Barinci 1 Arnaud Cheron 2, 3 François Langot 2, 4
1 UEVE - Université d'Évry-Val-d'Essonne
2 GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux
3 Research Center on Economics
4 CEPREMAP - Centre pour la recherche économique et ses applications
Abstract : This paper is concerned with the empirical relevance of indeterminacy and sunspots in explaining the business cycle. It argues that financial constraints provide a propagation mechanism able to generate business cycle facts observed in data in response to sunspot shocks. This point is demonstrated using an equilibrium business cycle model featuring heterogeneous households, endogenous labor supply and liquidity constraints. We first show that the model exhibits indeterminacy for roughly constant returns to scale. We then establish that our model accounts for stylized facts that neither the standard RBC model nor previous sunspots models have been able to capture. More specifically, the model driven purely by sunspots matches the procyclical movements in aggregate consumption, and the positively correlated forecastable changes of basic macroeconomic variables.
Keywords : Heterogeneity Liquidity Constraints Sunspots Increasing Returns
Type de document :
Article dans une revue
Macroeconomic Dynamics, Cambridge University Press (CUP), 2006, 10 (4), pp.529-544. 〈10.1017/S1365100506050280〉
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https://hal-pjse.archives-ouvertes.fr/halshs-00754131
Contributeur : Caroline Bauer <>
Soumis le : mardi 20 novembre 2012 - 08:44:37
Dernière modification le : vendredi 1 décembre 2017 - 01:19:38

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Jean-Paul Barinci, Arnaud Cheron, François Langot. Liquidity Constraints, Heterogeneous Households and Sunspots Fluctuations. Macroeconomic Dynamics, Cambridge University Press (CUP), 2006, 10 (4), pp.529-544. 〈10.1017/S1365100506050280〉. 〈halshs-00754131〉

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