Impacts of technological shock on the agricultural business cycle
The real business cycles in ASEAN-5 countries namely Indonesia, Malaysia, the Philippines, Thailand, and Vietnam over 1971-2015 fluctuated more than their agricultural business cycles. This research utilized the two-sector real business cycle model developed by Da-Rocha and Restuccia (2002) to sti...
Saved in:
| Main Author: | |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
Penerbit Universiti Kebangsaan Malaysia
2020
|
| Online Access: | http://journalarticle.ukm.my/15586/1/jeko_54%281%29-1.pdf http://journalarticle.ukm.my/15586/ https://www.ukm.my/fep/jem/content/2020.html |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| Summary: | The real business cycles in ASEAN-5 countries namely Indonesia, Malaysia, the Philippines, Thailand, and Vietnam
over 1971-2015 fluctuated more than their agricultural business cycles. This research utilized the two-sector real
business cycle model developed by Da-Rocha and Restuccia (2002) to stimulate such a stylized fact. The model
assumes that a social planner makes a decision in an initial period to choose the consumption, capital stock, and
working hours in the agricultural and non-agricultural sectors. This will enable a representative agent to attain
optimum utility for the entire life under certain economic restrictions and subject to technology shocks occurring in
both sectors. The mathematical methods applied to solve this decision-making problem for the social planner includes
linear quadratic approximations and stochastic dynamic programming methods. The simulation results suggest that
the applied model could reasonably well replicate the fluctuations of the real business cycle, agricultural business
cycle, and the non-agricultural business cycle. This reflects the situation where technology shocks in the agricultural
and non-agricultural sectors are related to each other and influence the volatility of these two economies.This suggest
that the governments should encourage research and development activities in both agricultural and non-agricultural
sectors to develop new technology that can generate technology shock to promote greater economic strength. |
|---|