Stochastic fiscal policy and the Swedish business cycle

Article Abstract:

Stochastic fiscal policy is argued to be vital for the business cycle as revealed by an analysis of fluctuations in distortive taxes and government spending that characterize the Swedish post-war business cycle. A simple stochastic growth model becomes empirically sound after adjustments were made to include imperfectly predictable fluctuations in payroll taxes, consumption taxes and government consumption. Using the simulated method of moments, it was found that models with stochastic fiscal policy cannot be statistically rejected when large sets of conventional moments are used.

Sweden, Fiscal policy, Business cycles

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Convergence in stochastic growth models: the importance of understanding why income levels differ

Article Abstract:

A study was conducted to show the importance of understanding the cause of varying income levels in per capita income convergence model estimation and interpretation. Monte Carlo experiments considered three reasons for variations in initial income levels. Results showed that when income is affected by more than one factor, then a given cross-section of income levels cannot be expected to converge in the same way for every point in time and for every country set.

Analysis, Income distribution, Stochastic approximation

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Convergence, endogenous growth, and productivity disturbances

Article Abstract:

The research utilized the framework of stochastic growth models to demonstrate that traditional characterizations of convergence can be misleading. If major parameters were defined, implications for convergence cannot be obtained unless under assumptions that are restrictive and economically unmotivated. The study also showed that there is not much difference among a big group of endogenous and exogenous growth models in their dynamic, aggregate behaviour.

Research, Models, Usage, Growth, Growth (Physiology), Macroeconomics, Stochastic systems

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