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Seasonality and equilibrium business cycle theories

  • R. Anton Braun
  • Charles L. Evans

We consider a dynamic, stochastic equilibrium business cycle model which is augmented to reflect seasonal shifts in preferences, technology, and government purchases. Our estimated parameterization implies implausibly large seasonal variation in the state of technology: rising at an annual rate of 24% in the fourth quarter and falling at an annual rate of 28% in the first quarter. Furthermore, our findings indicate that variation in the state of technology of this magnitude is required if the model is to explain the main features of the seasonal cycle.

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Paper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 168.

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Date of creation: 1994
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Handle: RePEc:fip:fedmsr:168
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