Journal for Economic Forecasting
Volume 4, Issue 2, 2007

An Analysis of the Fluctuations in the Romanian Economy Using the Real Business Cycles Approach

 

Caraiani, Petre : An Analysis of the Fluctuations in the Romanian Economy Using the Real Business Cycles Approach.  Published in Romanian Journal of Economic Forecasting, 2, 2007.

Full text available online 31 January 2008

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Abstract

In this paper I calibrate and simulate the standard Real Business Cycles model for the Romanian economy. In this respect, I use a set of estimated data for capital stock and GDP at quarterly frequency for the period 1991-2002. The results show that the standard RBC can be a starting point for simulating the macroeconomic dynamics in the Romanian economy. Standard deviations in the simulated model are close to those in the real economy, except for consumption. Correlations for most of the simulated variables are in a close range to those of the real variables, except again for consumption. There are also some results specific to the Romanian economy, as capital is moderately procyclical and consumption is more volatile than output.

Keywords: real business cycles, total factor productivity, transition economies.

JEL Classification: E32, E37.