Business Cycle Accounting-How important are technology shocks as a propagation mechanism? Some new evidence from Japan
AbstractThis paper investigates the role of technology shocks as a propagation mechanism for business cycles using the new technique of business cycle accounting (BCA) and some new evidence from Japan. BCA technique enables us to model the economy as a standard growth model, but extends it to allow multiple propagation channels (referred to as wedges). Applying it to Japan during the period 1980 to 2000, I find that though technology shocks play an important role in propagating market frictions, they are by no means enough to account for the observed economic fluctuations. Investment wedges play a major role, something that standard RBC models fail to recognize and consequently tends to overemphasize the role of technology shocks.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0508002.
Length: 29 pages
Date of creation: 02 Aug 2005
Date of revision:
Note: Type of Document - pdf; pages: 29. This paper was previously circulated as 'Accounting for the Lost Decade in Japan'
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business cycle accounting; wedges; propagation mechanism; technology; aggregate fluctuations; japan;
Find related papers by JEL classification:
- E - Macroeconomics and Monetary Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-08-13 (All new papers)
- NEP-DGE-2005-08-13 (Dynamic General Equilibrium)
- NEP-MAC-2005-08-13 (Macroeconomics)
- NEP-SEA-2005-08-13 (South East Asia)
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.:
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