An Anatomy of the Business Cycle

Harris Dellas (), Fabrice Collard and George-Marios Angeletos

No 1641, 2016 Meeting Papers from Society for Economic Dynamics

Abstract: We develop a new method for dissecting the comovements of macroeconomic variables over the business cycle. We use this to show that the data is consistent with models in which the forces (i.e., shocks and propagation mechanisms) that drive the fluctuations in output, investment, hours, and unemployment are strongly connected with one another, while also being relatively disconnected from those that drive the fluctuations in productivity, inflation, and interest rates. We document a similar disconnect between inflation and the labor share. We explain why these findings are at odds with existing macroeconomic models of either the RBC or the NK variety, and discuss how they provide guidance for future theoretical research.

Date: 2016
New Economics Papers: this item is included in nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed016:1641

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