RealBusinessCycleModelle

RealBusinessCycleModelle, often abbreviated as RBC-Modelle, refer to a family of dynamic stochastic general equilibrium macroeconomic models that explain business cycles primarily through real (supply-side) shocks rather than monetary or demand-side disturbances. The core idea is that fluctuations in productivity or technology drive output, employment, and investment, with prices and wages adjusting flexibly to clear markets.

Typical RBC models feature a representative household and firms. Firms use a production function, commonly neoclassical with constant returns to scale, to combine capital and labor into output. The production process includes a stochastic technology shock that shifts the efficiency of production. Households optimize intertemporal consumption and labor supply, choosing how much to work and save, while firms hire labor and rent capital to maximize profits. The model imposes a resource constraint: output equals consumption plus investment. Capital accumulates over time according to investment and depreciation. Prices, wages, and quantities adjust endogenously to shocks, and expectations are assumed to be rational.

A standard RBC framework yields Euler equations for consumption, a labour-leisure choice condition, and a capital accumulation equation. The observed comovement of technology, output, investment, and hours worked follows from the propagation of technology shocks through the capital stock and resource constraints. A key implication is that monetary policy is largely neutral in the short run when prices and wages are flexible, and real variables respond primarily to real shocks.

Critics note that RBC models understate the role of nominal rigidities and monetary policy in real economies, and struggle to explain prolonged recessions. Extensions common in the literature include adding habit formation, investment irreversibility, or interactions with nominal frictions to bridge gaps with empirical labor and price dynamics.