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refer to this measure of volatility as 'risk'. We find that fluctuations in risk are the most important shock driving the …
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"Using "business cycle accounting" (BCA), Chari, Kehoe and McGrattan (2006) (CKM) conclude that models of financial frictions which create a wedge in the intertemporal Euler equation are not promising avenues for modeling business cycle dynamics. There are two reasons that this conclusion is not...
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