An Anatomy of the Business Cycle
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.
|Date of creation:||2016|
|Contact details of provider:|| Postal: Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA|
Web page: http://www.EconomicDynamics.org/
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