A monetary-DSGE model with a shopping-time constraint: lessons from Bulgaria (1999-2020)

Vasilev, Aleksandar (2022) A monetary-DSGE model with a shopping-time constraint: lessons from Bulgaria (1999-2020). In: Advances in Business and Management. NOVA. ISBN 978-1-68507-834-8

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A monetary-DSGE model with a shopping-time constraint: lessons from Bulgaria (1999-2020)
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Abstract

We augment the standard business cycle model with "shopping time" as in Walsh (2017) to capture the valuable transaction services provided by money. More specifically, by using money, the household saves time on purchases, as compared to a barter arrangement. This specification is then calibrated to Bulgarian data after the introduction of the currency board (1999-2020). The presence of a shopping time-constraint leads to money accentuating economic
fluctuations. In particular, the presence of the shopping-time constraint produce a more sophisticated propagation mechanism, with novel trade-offs faced by the household. The model generates too volatile consumption,
and counter-cyclical consumption, which are at serious odds with data. Overall, the model with shopping time, and physical capital accumulation, does not provide a good framework to study business cycles in Bulgaria.

Keywords:business cycles, shopping time, Bulgaria
Subjects:L Social studies > L130 Macroeconomics
Divisions:Lincoln International Business School
ID Code:49304
Deposited On:17 May 2022 10:48

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