Output Dynamics in Real-Business-Cycle Models
AbstractThe time-series literature reports two stylized facts about output dynamics in the United States: GNP growth is positively autocorrelated and GNP appears to have an important trend-reverting component. This paper investigates whether current real-business-cycle models are consistent with these stylized facts. Many real-business-cycle models have weak internal propagation mechanisms and must rely on external sources of dynamics to replicate both facts. Models that incorporate labor adjustment costs are partially successful. They endogenously generate positive autocorrelation in output growth but they need implausibly large transitory shocks to match the trend-reverting component in output. Copyright 1995 by American Economic Association.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 85 (1995)
Issue (Month): 3 (June)
Other versions of this item:
- Cogley, T. & Nason, J.M., 1994. "Output Dynamics in Real Business Cycle Models," UBC Departmental Archives 94-28, UBC Department of Economics.
- Timothy Cogley & James M. Nason, 1993. "Output dynamics in real business cycle models," Working Papers in Applied Economic Theory 93-10, Federal Reserve Bank of San Francisco.
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
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- Krugman was looking under a lamppost
by pushmedia1 in The Ambrosini Critique on 2009-09-17 16:42:26
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