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How well can business cycle accounting account for business cycles?

Keisuke Otsu

Economics Bulletin, 2012, vol. 32, issue 2, 1774-1784

Abstract: The business cycle accounting method introduced by Chari, Kehoe and McGrattan (2007) is a useful tool to decompose business cycle fluctuations into their contributing factors. However, the model estimated by the maximum likelihood method cannot replicate business cycle moments computed from data. Moment-based estimation might be an attractive alternative if the purpose of the research is to study business cycle properties such as volatility, persistence and cross-correlation of variables instead of a specific business cycle episode.

Keywords: Business Cycle Accounting; Business Cycle Moments (search for similar items in EconPapers)
JEL-codes: E1 E3 (search for similar items in EconPapers)
Date: 2012-06-26
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