Animal spirits, investment and unemployment: An old Keynesian view of the Great Recession

Abstract

This paper develops a DSGE model with investment and capital accumulation build along demand-driven explanations of the Great Recession. Specifically, following Farmer (2013), I set forth a search framework in which households decide about consumption while firms decide about recruiting effort as well as investment. This setting closed with market clearing in good and asset markets has one less equation than unknowns. As a consequence, in order to solve such an indeterminacy, I assume that investment is driven by self-fulfilling expectations about the adjustment cost of capital. Consistently with the view of business cycles pushed by stock price fluctuations, this model has the potential to provide a more comprehensive rationale for the consumption–investment patterns observed during the years of the crisis

South African Unemployment in the Post-Financial Crisis Era: What are the Determinants?

“…Secondly, trade, investment and household debt produce negative coefficient estimates in both the long-run and short-run equilibrium, a finding which concurs with those previously obtained in the studies of Felbermayr et al (2011) and Guerrazzi (2015) for the tradeunemployment and investment-unemployment relationship, respectively, and yet differs from the negative household debt-unemployment relationship established in Turinetti and Zhuang (2011), Bethune, Rocheteau, and Rupert (2015) and Shaffer and Zuniga (2016). However, the significance of these estimates varies across four sample groups.…”

“…On the other hand, Driver and Munoz-Bugarin (2010) present a wage bargaining theoretical model in which the labour share increases with improved capital accumulation over the steady state. More recently Guerrazzi (2015) developed a DSGE model with a search framework in which households decide about consumption while firms consider recruiting efforts and investment decisions and find that lower (higher) investment and lower (higher) consumption pushes unemployment upwards (downwards).…”

Prosperity for All: An Assessment of the “Farmerian” Remedies to Prevent Financial Crises and Reduce Unemployment

“…Moreover, among the components of private aggregate demand, investment appears as the more volatile variable, so, at least in principle, more prone to mirror sudden switches in market confidence [cf. Gelain and Guerrazzi (2015), Guerrazzi (2015)]. Furthermore, focusing on the wave of pessimism triggered by the finance-induced recession of 2006-2009, we observed a strong negative impact on consumption and investment.…”

Pengaruh Likuiditas dan Profitabilitas Terhadap Harga Saham Pada Perusahaan Manfaktur Sub Sektor Makanan dan Minuman di Bursa Efek Indonesia

“…Jika investor banyak melakukan penawaran saham maka akan menyebabkan harga saham menurun dan jika investor banyak melakukan permintaan terhadap harga saham perusahaan maka harga saham perusahaan tersebut akan meningkat. Adapun nilai Saham menurut Guerrazzi (2015) terbagi atas tiga jenis yaitu: (a) Nilai Buku, (b) Harga Pasar, (c) Nilai Intrinsik. Ada beberapa variabel yang berhubungan dengan harga saham.…”