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Keynesian impulses versus Solow residuals: identifying sources of business cycle fluctuations

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  • David N. DeJong

    (Department of Economics, University of Pittsburgh, USA)

  • Beth F. Ingram

    (Department of Economics, University of Iowa, USA)

  • Charles H. Whiteman

    (Department of Economics, University of Iowa, USA)

Abstract

We employ a neoclassical business-cycle model to study two sources of business-cycle fluctuations: marginal efficiency of investment shocks, and total factor productivity shocks. The parameters of the model are estimated using a Bayesian procedure that accommodates prior uncertainty about their magnitudes; from these estimates, posterior distributions of the two shocks are obtained. The postwar US experience suggests that both shocks are important in understanding fluctuations, but that total factor productivity shocks are primarily responsible for beginning and ending recessions. Copyright © 2000 John Wiley & Sons, Ltd.

Suggested Citation

  • David N. DeJong & Beth F. Ingram & Charles H. Whiteman, 2000. "Keynesian impulses versus Solow residuals: identifying sources of business cycle fluctuations," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 15(3), pages 311-329.
  • Handle: RePEc:jae:japmet:v:15:y:2000:i:3:p:311-329
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    References listed on IDEAS

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