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An Anatomy of the Business Cycle


  • Harris Dellas

    (University of Bern)

  • Fabrice Collard

    (University of Bern)

  • George-Marios Angeletos



We develop a new method for dissecting the comovements of macroeconomic variables over the business cycle. We use this to show that the data is consistent with models in which the forces (i.e., shocks and propagation mechanisms) that drive the fluctuations in output, investment, hours, and unemployment are strongly connected with one another, while also being relatively disconnected from those that drive the fluctuations in productivity, inflation, and interest rates. We document a similar disconnect between inflation and the labor share. We explain why these findings are at odds with existing macroeconomic models of either the RBC or the NK variety, and discuss how they provide guidance for future theoretical research.

Suggested Citation

  • Harris Dellas & Fabrice Collard & George-Marios Angeletos, 2016. "An Anatomy of the Business Cycle," 2016 Meeting Papers 1641, Society for Economic Dynamics.
  • Handle: RePEc:red:sed016:1641

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