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Temporary Cycles or Volatile Trends? Economic Fluctuations in 21 OECD Economies

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  • Sterne, Gabriel
  • Bayoumi, Tamim

Abstract

Structural vector autoregressions are used to distinguish between transitory (AD) disturbances to output and permanent (AS) disturbances. The results indicate that the two disturbances are of roughly equal importance in explaining fluctuations in growth and inflation across a wide range of OECD countries. A method of distinguishing the effects of each type of disturbance on output and prices is then outlined. This makes it possible to measure 'supply potential' for each economy. The authors find evidence of a steady decline in the rate of increase of supply potential over time, a view consistent with the 'catch up' theory of postwar economic growth. Copyright 1995 by Blackwell Publishers Ltd and The Victoria University of Manchester

Suggested Citation

  • Sterne, Gabriel & Bayoumi, Tamim, 1995. "Temporary Cycles or Volatile Trends? Economic Fluctuations in 21 OECD Economies," The Manchester School of Economic & Social Studies, University of Manchester, vol. 63(1), pages 23-51, March.
    • Handle: RePEc:bla:manch2:v:63:y:1995:i:1:p:23-51
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    Cited by:

    1. D.M. Nachane & Nishita Raje, 2007. "Financial Liberalisation and Monetary Policy," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 1(1), pages 47-83, March.
    2. Charles St-Arnaud, 2004. "Une approche éclectique d'estimation du PIB potentiel pour le Royaume-Uni," Staff Working Papers 04-46, Bank of Canada.
    3. Jan Gottschalk & Willem Van Zandweghe, 2003. "Do Bivariate SVAR Models with Long-Run Identifying Restrictions Yield Reliable Results? An Investigation into the Case of Germany," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 139(I), pages 55-81, March.
    4. Dopke, Jorg, 2001. "Macroeconomic forecasts and the nature of economic shocks in Germany," International Journal of Forecasting, Elsevier, vol. 17(2), pages 181-201.
    5. Francis Breedon & Ian Twinn, 1995. "Valuation of underwriting agreements for UK rights issues: evidence from the traded option market," Bank of England working papers 39, Bank of England.
    6. Mark S Astley & Andrew G Haldane, 1995. "Money as an Indicator," Bank of England working papers 35, Bank of England.
    7. ODIA NDONGO, Yves Francis, 2007. "Les sources des fluctuations marcoéconomiques au Cameroun," MPRA Paper 1308, University Library of Munich, Germany.
    8. Funke, Michael, 1997. "Supply potential and output gaps in West German manufacturing," International Journal of Forecasting, Elsevier, vol. 13(2), pages 211-222, June.
    9. Alejandro D. Jacobo, 2002. "Taking the business cycle´s pulse to some Latin American economies: Is there a rhythmical beat?," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 17(2), pages 219-245.
    10. Attfield, Clifford L. F. & Silverstone, Brian, 1998. "Okun's Law, Cointegration and Gap Variables," Journal of Macroeconomics, Elsevier, vol. 20(3), pages 625-637, July.
    11. jose ramos pires manso, 2004. "Economical Versus Political Cycles In An Iberian Manufacturing Sector," Industrial Organization 0404003, University Library of Munich, Germany.
    12. Louis, Rosmy & Osman, Mohammad & Balli, FAruk, 2007. "On The Road to Monetary Union – Do Arab Gulf Cooperation Council Economies React in the same way to United States' Monetary Policy Shocks?," MPRA Paper 11610, University Library of Munich, Germany, revised Nov 2008.
    13. Marco Bianchi, 1995. "Testing for convergence: evidence from non-parametric multimodality tests," Bank of England working papers 36, Bank of England.
    14. van Zandweghe, Willem & Gottschalk, Jan, 2001. "Do Bivariate SVAR Models with Long-Run Identifying Restrictions Yield Reliable Results? The Case of Germany," Kiel Working Papers 1068, Kiel Institute for the World Economy.
    15. Jörg Döpke & Christian Pierdzioch, 2000. "Stock Market Dispersion, Sectoral Shocks, and the German Business Cycle," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 136(IV), pages 531-555, December.
    16. Francis Breedon, 1996. "Why do the LIFFE and DTB bund futures contracts trade at different prices?," Bank of England working papers 57, Bank of England.
    17. Mark S Astley & Tony Yates, 1999. "Inflation and real disequilibria," Bank of England working papers 103, Bank of England.
    18. Ewa Wrobel & Malgorzata Pawlowska, 2002. "Monetary transmission in Poland: some evidence on interest rate and credit channels," NBP Working Papers 24, Narodowy Bank Polski.

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