Methods for assessing the impact of financial effects on business cycles in macroeconometric models

Adrian Pagan and Tim Robinson

Journal of Macroeconomics, 2014, vol. 41, issue C, 94-106

Abstract: Many macroeconometric models are built to understand business cycles. However, the methods applied to assess them are rarely of the form that one learns whether they provide a good explanation of cycle characteristics. In this paper we review and apply techniques that do this for models with financial/real interactions. Using these methods we demonstrate that in models with two common types of financial/real interactions – the financial accelerator and collateral effects – the business cycle is not affected to the extent that the empirical literature suggests is needed.

Keywords: Financial frictions; Business cycles (search for similar items in EconPapers)
JEL-codes: E32 E44 E51 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jmacro:v:41:y:2014:i:c:p:94-106

DOI: 10.1016/j.jmacro.2014.04.002

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