Technology Shocks or Coloured Noise? Why real-business-cycle models cannot explain actual business cycles

1998 ◽  
Vol 10 (3) ◽  
pp. 299-327 ◽  
Author(s):  
Kevin D. Hoover ◽  
Kevin D. Salyer
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Real Business Cycle ◽  
Technology Shocks ◽  
Coloured Noise

Technology Shocks and the Great Depression

2016 ◽  
Vol 76 (3) ◽  
pp. 909-933 ◽  
Author(s):  
Shingo Watanabe
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Great Depression ◽  
Imperfect Competition ◽  
Real Business Cycle ◽  
Technology Shocks ◽  
The Great Depression ◽  
Large Fluctuations ◽  
Technology Growth

Standard productivity measures indicate large fluctuations in technology during the Great Depression. This article's historical technology series (1892–1966), controlled for aggregation effects, varying input utilization, non-constant returns, and imperfect competition, does not indicate technology regress such that could trigger the downturn. In contrast, technology improvements in the recovery were so rapid that, over the whole Great Depression period, technology growth was highest among pre-WWII decades. This article also finds that output changed little and inputs fell when technology improved in the pre-WWII period. Real-business-cycle models have difficulty in explaining pre-WWII business cycles characterized by such responses.

scholarly journals Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?

1999 ◽  
Vol 89 (1) ◽  
pp. 249-271 ◽  
Author(s):  
Jordi Galí
Keyword(s):  
Simple Model ◽  
Business Cycles ◽  
Business Cycle ◽  
Monopolistic Competition ◽  
Real Business Cycle ◽  
Technology Shocks ◽  
Aggregate Fluctuations ◽  
G7 Countries ◽  
Technology Shock ◽  
The Business Cycle

I estimate a decomposition of productivity and hours into technology and non-technology components. Two results stand out: (a) the estimated conditional correlations of hours and productivity are negative for technology shocks, positive for nontechnology shocks; (b) hours show a persistent decline in response to a positive technology shock. Most of the results hold for a variety of model specifications, and for the majority of G7 countries. The picture that emerges is hard to reconcile with a conventional real-business-cycle interpretation of business cycles, but is shown to be consistent with a simple model with monopolistic competition and sticky prices. (JEL E32, E24)

REAL BUSINESS CYCLES AFTER THREE DECADES

2013 ◽  
Vol 19 (2) ◽  
pp. 425-445
Author(s):  
Sumru Altug ◽  
Warren Young
Keyword(s):  
Social Sciences ◽  
Business Cycles ◽  
Business Cycle ◽  
Panel Discussion ◽  
Real Business Cycle ◽  
Real Business Cycles ◽  
Macroeconomic Analysis ◽  
Time To Build ◽  
History Of ◽  
Recent Financial Crisis

The transcript of a panel discussion marking three decades of the real business cycle approach to macroeconomic analysis as manifested in Kydland and Prescott's “Time to Build” (Econometrica, 1982) and Long and Plosser's “Real Business Cycles” (Journal of Political Economy, 1983). The panel consists of Edward Prescott, Finn Kydland, Charles Plosser, John Long, Thomas Cooley, and Gary Hansen. The discussion is moderated by Sumru Altug and Warren Young. The panel touches on a wide variety of issues related to real business cycle models, including their history and methodology, starting with the work of Prescott and Kydland at Carnegie Tech and Plosser and Long at Rochester; their applications to policy; and their role in the recent financial crisis and likely future.The panel discussion was held in a session sponsored by the History of Economics Society at the Allied Social Sciences Association (ASSA) meetings in the Randle A Room of the Manchester Grand Hyatt Hotel in San Diego, California.

scholarly journals Do Equilibrium Real Business Cycle Theories Explain Postwar U. S. Business Cycles?

1986 ◽  
Vol 1 ◽  
pp. 91-135 ◽  
Author(s):  
Martin Eichenbaum ◽  
Kenneth J. Singleton
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Real Business Cycle

Persistence of business cycles in multisector real business cycle models

2006 ◽  
Vol 2 (3-4) ◽  
pp. 181-197 ◽  
Author(s):  
Jess Benhabib ◽  
Roberto Perli ◽  
Plutarchos Sakellaris
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Real Business Cycle

scholarly journals Plant-Level Irreversible Investment and Equilibrium Business Cycles

2002 ◽  
Vol 92 (1) ◽  
pp. 181-197 ◽  
Author(s):  
Marcelo L Veracierto
Keyword(s):  
Business Cycles ◽  
Business Cycle ◽  
Real Business Cycle ◽  
Aggregate Fluctuations ◽  
Cycle Model ◽  
Irreversible Investment ◽  
Business Cycle Model ◽  
Plant Level ◽  
Aggregate Dynamics ◽  
Real Business Cycle Model

This paper evaluates the importance of microeconomic irreversibilities for aggregate dynamics using a real-business-cycle (RBC) model characterized by investment irreversibilities at the establishment level. The main finding is that investment irreversibilities do not play a significant role in an otherwise standard real-business-cycle model: Even though investment irreversibilities are crucial for establishment-level dynamics, aggregate fluctuations are basically the same under fully flexible or completely irreversible investment.

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