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dc.contributor.authorSantos, Miguel
dc.date.accessioned2020-12-16T21:33:34Z
dc.date.issued2015-09
dc.identifier.citationSantos, Miguel. “The Right Fit for the Wrong Reasons: Real Business Cycle in an Oil-Dependent Economy.” CID Research Fellow and Graduate Student Working Paper Series 2015.64, Harvard University, Cambridge, MA, September 2015.en_US
dc.identifier.urihttps://nrs.harvard.edu/URN-3:HUL.INSTREPOS:37366587*
dc.description.abstractVenezuela is an oil-dependent economy subject to large exogenous shocks, with a rigid labor market. These features go straight at the heart of two weaknesses of real business cycle (RBC) theory widely reported in the literature: Neither shocks are volatile enough nor real salaries are sufficiently flexible as required by the RBC framework to replicate the behavior of the economy. We calibrate a basic RBC model and compare a set of relevant statistics from RBC-simulated time series with actual data for Venezuela and the benchmark case of the United States (1950-2008). In spite of Venezuela being one of the most heavily intervened economies in the world, RBC-simulated series provide a surprisingly good fit when it comes to the non-oil sector of the economy, and in particular for labor markets. Large restrictions on dismissal and widespread minimum (nominal) wage put all the burden of adjustment on prices; which translate into highly volatile real wages.en_US
dc.language.isoen_USen_US
dc.publisherCenter for International Development at Harvard Universityen_US
dc.relation.isversionofhttps://www.hks.harvard.edu/centers/cid/publications/fellow-graduate-student-working-papersen_US
dash.licenseLAA
dc.titleThe Right Fit for the Wrong Reasons: Real Business Cycle in an Oil-Dependent Economyen_US
dc.typeResearch Paper or Reporten_US
dc.description.versionAccepted Manuscripten_US
dc.relation.journalCID Research Fellow and Graduate Student Working Paper Seriesen_US
dc.date.available2020-12-16T21:33:34Z
dash.contributor.affiliatedSantos, Miguel


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