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Are These Classical Business Cycles?

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Author Info
Michael Reiter
Ulrich Woitek

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Abstract

The aim of this paper is to test formally the classical business cycle hypothesis, using data from industrialized countries for the time period since 1960. The hypothesis is characterized by the view that the cyclical structure in GDP is concentrated in the investment series: fixed investment has typically a long cycle, while the cycle in inventory investment is shorter. To check the robustness of our results, we subject the data for 15 OECD countries to a variety of detrending techniques. While the hypothesis is not confirmed uniformly for all countries, there is a considerably high number for which the data display the predicted pattern. None of the countries shows a pattern which can be interpreted as a clear rejection of the classical hypothesis.

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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 398.

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Date of creation: Mar 1999
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Handle: RePEc:upf:upfgen:398

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Related research
Keywords: business cycles; investment cycles; spectral tests;

Other versions of this item:

Find related papers by JEL classification:
E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity

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References listed on IDEAS
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  1. Watson, Mark W, 1993. "Measures of Fit for Calibrated Models," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 1011-41, December. [Downloadable!] (restricted)
  2. Canova, Fabio, 1996. "Three tests for the existence of cycles in time series," Ricerche Economiche, Elsevier, vol. 50(2), pages 135-162, June. [Downloadable!] (restricted)
  3. Burnside, Craig, 1998. "Detrending and business cycle facts: A comment," Journal of Monetary Economics, Elsevier, vol. 41(3), pages 513-532, May. [Downloadable!] (restricted)
  4. Lawrence J. Christiano & Robert J. Vigfusson, 1999. "Maximum Likelihood in the Frequency Domain: A Time to Build Example," NBER Working Papers 7027, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Cogley, Timothy & Nason, James M, 1995. "Output Dynamics in Real-Business-Cycle Models," American Economic Review, American Economic Association, vol. 85(3), pages 492-511, June. [Downloadable!] (restricted)
    Other versions:
  6. Canova, Fabio, 1998. "Detrending and business cycle facts: A user's guide," Journal of Monetary Economics, Elsevier, vol. 41(3), pages 533-540, May. [Downloadable!] (restricted)
  7. Gale, Douglas, 1996. "Delay and Cycles," Review of Economic Studies, Blackwell Publishing, vol. 63(2), pages 169-98, April. [Downloadable!] (restricted)
  8. Francis X. Diebold & Lee E. Ohanian & Jeremy Berkowitz, 1998. "Dynamic equilibrium economies: a framework for comparing models and data," Staff Report 243, Federal Reserve Bank of Minneapolis. [Downloadable!]
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  9. Marianne Baxter & Robert G. King, 1995. "Measuring Business Cycles Approximate Band-Pass Filters for Economic Time Series," NBER Working Papers 5022, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Canova, Fabio, 1998. "Detrending and business cycle facts," Journal of Monetary Economics, Elsevier, vol. 41(3), pages 475-512, May. [Downloadable!] (restricted)
    Other versions:
  11. Wen, Yi, 1998. "Investment cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 22(7), pages 1139-1165, May. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ulrich Woitek, 1998. "A Note on the Baxter-King Filter," Working Papers 9813, Department of Economics, University of Glasgow. [Downloadable!]
  2. Robert Hart & James Malley & Ulrich Woitek, 2009. "Real earnings and business cycles: new evidence," Empirical Economics, Springer, vol. 37(1), pages 51-71, September. [Downloadable!] (restricted)
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This page was last updated on 2009-12-11.

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