American Economic Review Vol. 110 No. 10 2020
Business-Cycle Anatomy
open access
Abstract
We propose a new strategy for dissecting the macroeconomic time series, provide a template for the business-cycle propagation mechanism that best describes the data, and use its properties to appraise models of both the parsimonious and the medium-scale variety. Our findings support the existence of a main business-cycle driver but rule out the following candidates for this role: technology or other shocks that map to TFP movements; news about future productivity; and inflationary demand shocks of the textbook type. Models aimed at accommodating demand-driven cycles without a strict reliance on nominal rigidity appear promising.
- DOI
- 10.1257/aer.20181174
- Volume
- 110
- Issue
- 10
- Pages
- 3030-3070
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref