Technology Shocks and Business Cycle: An Analysis Based on the Malmquist Index
AbstractThe goal of this study examines the quantitative implications of the Malmquist index in a standard Real Business Cycle (RBC) model as a measure of technology shock. To achieve this, the paper first investigates the empirical validity of the equivalence proposition on the two technology shock measures: a relatively new Malmquist Index and the predominant Solow residual. On the basis of permutation tests, this paper shows the observational equivalence of the two measures. Then, the role of technology shock measured by the Malmquist index in the RBC model is examined. The study uncovers that the RBC model with the Malmquist index successfully replicates the stylized U.S. business cycle features documented in the existing literature. Finally, this paper discusses potential benefits of the Malmquist index in the business cycle studies.
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Bibliographic InfoPaper provided by Towson University, Department of Economics in its series Working Papers with number 2009-04.
Length: 33 pages
Date of creation: Dec 2009
Date of revision: Dec 2009
Malmquist Index; Observational Equivalence; Solow Residual; RBC Model; Aggregate Technology Shocks.;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-BEC-2009-12-19 (Business Economics)
- NEP-DGE-2009-12-19 (Dynamic General Equilibrium)
You can help add them by filling out this form.
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