Can Shocks to Risk Aversion Explain Business Cycle Fluctuations in Bulgaria (1999–2019)?

Vasilev, Aleksandar (2021) Can Shocks to Risk Aversion Explain Business Cycle Fluctuations in Bulgaria (1999–2019)? Managing Global Transitions, 19 (4). pp. 271-284. ISSN 1854-6935

Full content URL: https://ojs.upr.si/index.php/fm/article/view/45

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Can Shocks to Risk Aversion Explain Business Cycle Fluctuations in Bulgaria (1999–2019)?
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Abstract

Stochastic risk aversion is introduced into a dynamic general-equilibrium setup augmented with government. The theoretical framework is calibrated to Bulgarian data for the period 1999-2019. The quantitative relevance of shocks to risk aversion is investigated for the propagation of business cycles in the Bulgarian economy. More specifically, the presence of stochastic risk aversion in the theoretical setup improves the fit vis-`a-vis data by increasing variability of employment and decreasing the variability of investment. However, those improvements are at the expense of lowering the variability of investment and wages in the model economy.

Keywords:: business cycles; stochastic risk aversion; Bulgaria
Subjects:L Social studies > L130 Macroeconomics
Divisions:Lincoln International Business School
ID Code:47531
Deposited On:15 Dec 2021 13:22

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