Medium Term Business Cycles

Diego Comin and Mark Gertler

No 10003, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Over the postwar, the U.S., Europe and Japan have experienced what may be thought of as medium frequency oscillations between persistent periods of robust growth and persistent periods of relative stagnation. These medium frequency movements, further, appear to bear some relation to the high frequency volatility of output. That is, periods of stagnation are often associated with significant recessions, while persistent booms typically are either free of recessions or are interrupted only by very modest downturns. In this paper we explore the idea of medium term cycles, which we define as reflecting the sum of the high and medium frequency variation in the data. We develop a methodology for identifying these kinds of fluctuations and then show that a number of important macroeconomic time series exhibit significant medium term cycles. The cycles feature strong procyclical movements in both disembodied and embodied technological change, research & development, and the efficiency of resource utilization. We then develop a model to explain the medium term cycle that features both disembodied and embodied endogenous technological change, along with countercyclical markups and variable factor utilization. The model is able to generate medium term fluctuations in output, technological change, and resource utilization that resemble the data, with a non-technological shock as the exogenous disturbance. In particular the model offers a unified approach to explaining both high and medium frequency variation in aggregate business activity.

JEL-codes: E3 O3 (search for similar items in EconPapers)
Date: 2003-09
New Economics Papers: this item is included in nep-dev, nep-dge and nep-mac
Note: EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Published as Comin, Diego and Mark Gertler. "Medium-Term Business Cycles," American Economic Review, 2006, v96(3,Jun), 523-551.

Downloads: (external link)
http://www.nber.org/papers/w10003.pdf (application/pdf)

Related works:
Journal Article: Medium-Term Business Cycles (2006)
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:nbr:nberwo:10003

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w10003

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().