Stylized Facts of the Business Cycle: Universal Phenomenon, or Institutionally Determined?
Vadim Kufenko () and
Journal of Business Cycle Research, 2017, vol. 13, issue 2, 165-187
Abstract This paper empirically investigates and theoretically reflects on the generality of some “stylized facts” of business cycles. Using data for 1960–2016 and a sample of OECD countries, the duration of business cycles as well as three models capturing core macroeconomic relations are estimated: the Phillips curve (the inflation-unemployment nexus), Okun’s law (i.e. the relation between output growth and unemployment) and the inflation-output relation. Results are validated by relevant statistical tests. Observed durations vary from 4.2 to 7.4 years, and estimated coefficients differ in signs and magnitudes. An explanation of this heterogeneity is attempted by referring to proxies for various institutional variables. The findings suggest that core coefficients in the relations, such as the slope of the Phillips curve, show significant correlation with some of these variables, but no uniform results are obtained. In the detailed theoretical discussion and interpretation it is thus argued that the notable differences between countries call the universality of the “stylized facts” into question, but also that these variations cannot be explained exhaustively by the institutional proxy variables employed here.
Keywords: Business cycles; Empirical analysis; Institutions; Stylized facts (search for similar items in EconPapers)
JEL-codes: E02 E32 E39 F44 (search for similar items in EconPapers)
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Working Paper: Stylized facts of the business cycle: Universal phenomenon, or institutionally determined? (2015)
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