Demand and Productivity Components of Business Cycles: Estimates and Implications

Frédéric Dufourt

Post-Print from HAL

Abstract: Standard stochastic growth models provide theoretical restrictions on output decomposition which can be used to investigate whether productivity shocks played a major role in observed business cycles. Applying these restrictions to US data leads to the following findings: (i) Business cycles implied by productivity shocks are mildly correlated to overall fluctuations and help account for a few episodes of US postwar recessions. However, only 20% of US fluctuations can be explained by these shocks. (ii) Most fluctuations seem instead to be due to "nominal demand" shocks, i.e. shocks which move output and prices in the same direction, but whose effects on output are ultimately transitory. (iii) Canonical sticky price models in the new-neoclassical synthesis tradition can account for the cyclical comovements of output and prices, but canonical, frictionless, RBC models cannot.

Keywords: Business cycles; Demand shocks; Productivity shocks (search for similar items in EconPapers)
Date: 2006
Note: View the original document on HAL open archive server: https://hal.science/hal-00279149v2
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Journal of Monetary Economics, 2006, 52 (6), pp.1089-1105. ⟨10.1016/j.jmoneco.2005.08.011⟩

Downloads: (external link)
https://hal.science/hal-00279149v2/document (application/pdf)

Related works:
Journal Article: Demand and productivity components of business cycles: Estimates and implications (2005)
Working Paper: Demand and productivity components of business cycles: Estimates and implications (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00279149

DOI: 10.1016/j.jmoneco.2005.08.011

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().