Business-Cycle Anatomy – American Economic Association

Abstract

We propose a new strategy for dissecting the macroeconomic time series, provide a template for the business-cycle propagation mechanism that best describes the data, and use its properties to appraise models of both the parsimonious and the medium-scale variety. Our findings support the existence of a main business-cycle driver but rule out the following candidates for this role: technology or other shocks that map to TFP movements; news about future productivity; and inflationary demand shocks of the textbook type. Models aimed at accommodating demand-driven cycles without a strict reliance on nominal rigidity appear promising.

Citation

Angeletos, George-Marios, Fabrice Collard, and Harris Dellas.

2020.

“Business-Cycle Anatomy.”

American Economic Review

,

110 (10):
3030-70

.

DOI: 10.1257/aer.20181174

JEL Classification

• C22
  Single Equation Models; Single Variables: Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
• E10
  General Aggregative Models: General
• E32
  Business Fluctuations; Cycles