An Endogenous Mechanism of Business Cycles

  title={An Endogenous Mechanism of Business Cycles},
  author={Dimitri Kroujiline and Maxim Gusev and Dmitry Ushanov and Sergey V. Sharov and Boris Govorkov},
  journal={FEN: Behavioral Finance (Topic)},
This paper suggests that business cycles may be a manifestation of coupled economy-market dynamics and describes a mechanism that can generate economic fluctuations consistent with observed business cycles. To this end, we seek to incorporate into the macroeconomic framework a dynamic stock market model based on opinion interactions (Gusev et al., 2015). We derive this model from microfoundations, provide its empirical verification including market return prediction (backtested and live-track… 
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