imprint:
Cambridge, Mass: National Bureau of Economic Research, July 2018
Published in:NBER working paper series ; no. w24875
Extent:
1 Online-Ressource
Language:
English
DOI:
10.3386/w24875
Identifier:
Reproduction note:
Hardcopy version available to institutional subscribers
Origination:
Footnote:
Mode of access: World Wide Web
System requirements: Adobe [Acrobat] Reader required for PDF files
Description:
We dissect the comovement patterns of the macroeconomic data, identify a single shock that accounts for the bulk of the business-cycle volatility in the key quantities, and use its empirical properties to appraise parsimonious models of the business cycle. Through this lens, the data appears to be at odds with theories that attribute a major role to fluctuations in TFP, to news about future productivity or the long run, and to demand shocks of the New Keynesian type. Instead, it appears to favor theories that allow for demand-driven fluctuations without nominal rigidities and Philips curves. Our findings can also be of use in the evaluation of larger models that employ a multitude of shocks. In this context, we argue that leading DSGE models seem to lack the propagation mechanism observed in the data