Business Cycle Models with Indeterminacy

1 Introduction.- 1.1 Introduction.- 1.2 New methods of business cycle theory.- 1.2.1 Building blocks of new classical macroeconomics.- 1.2.2 Real Business Cycle theory.- 1.2.3 The quantitative method.- 1.3 Business cycle models with indeterminacy.- 1.3.1 Animal Spirits.- 1.3.2 Applying the new classical macroeconomics methodology.- 1.3.3 Equilibrium solutions of linear rational expectations models: an informal discussion.- 1.3.4 An example of an artificial economy which can produce sunspots.- 1.3.5 The modelling of beliefs.- 1.3.6 Empirical evidence.- 1.3.7 Welfare and stabilization policy.- 1.4 Related work.- 1.4.1 One-sector models.- 1.4.2 Two-sector models.- 1.4.3 Indeterminacy in models of economic growth.- 1.5 Overview of dissertation.- 1.5.1 Chapter 2: Indeterminacy, business cycles and modest increasing returns to scale.- 1.5.2 Chapter 3: Self-fulfilling prophecies and economic fluctuations in a two-sectoral growth model.- 1.5.3 Chapter 4: Animal spirits, technology shocksand the business cycle.- 1.5.4 Conclusion.- 1.6 Appendix.- 1.6.1 The equilibrium solutions of linear rational expectations models: a formal discussion.- 2 Indeterminacy, Business Cycles and Modest Increasing Returns to Scale.- 2.1 Introduction.- 2.2 The model.- 2.2.1 The household.- 2.2.2 The firms.- 2.2.3 Returning to the households.- 2.3 The equilibrium dynamics.- 2.3.1 The steady state.- 2.3.2 The solution mechanism.- 2.4 Calibration.- 2.5 Results.- 2.5.1 Eigenvalues.- 2.6 Interpretation.- 2.7 Second moments.- 2.7.1 Population moments.- 2.7.2 Model moments.- 2.7.3 Model moments: results.- 2.7.4 The standard Real Business Cycle model.- 2.8 Conclusion.- 2.9 Appendix.- 2.9.1 The measure of returns to scale.- 2.9.2 The linearized version of the economy.- 3 Self-Fulfilling Prophecies and Business Cycles in a Two-Sector Stochastic Optimal Growth Model.- 3.1 Introduction.- 3.2 The model.- 3.2.1 The household.- 3.2.2 The firms.- 3.2.3 The equilibrium number of firms.- 3.2.4 The factormarkets.-