Proceedings of the Thirteenth International Society of Sports Nutrition (ISSN) Conference and Expo

Meeting Abstracts: Proceedings of the Thirteenth International Society of Sports Nutrition (ISSN) Conference and Expo Clearwater Beach, FL, USA. 9-11 June 201

An R&D-based Real Business Cycle Model

The New Keynesian Real Business Cycle model with staggered price adjustment is augmented with an R&D producing sector. Two sources of economic shocks are considered, namely random participation (perturbances to the value of alternative investment opportunities in another sector) and financial intermediation (shocks to the cost of raising capital in the financial intermediation market). We find that, when compared to the baseline model, both models can explain procyclical R&D spending. Additionally, the investment oversensitivity problem is corrected. However, only the financial intermediation model is consistent with the observed finding that the volatility of R&D is larger than those of investment and output