TY  - JOUR
AU  - Justiniano,Alejandro
AU  - Primiceri,Giorgio E.
AU  - Tambalotti,Andrea
TI  - Investment Shocks and Business Cycles
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15570
PY  - 2009
Y2  - December 2009
UR  - http://www.nber.org/papers/w15570
L1  - http://www.nber.org/papers/w15570.pdf
N1  - Author contact info:
Alejandro Justiniano
Economic Research Department
Federal Reserve Bank of Chicago
230 S. LaSalle Street
Chicago, IL 60604
Tel: 312/322-5900
E-Mail: ajustiniano@frbchi.org

Giorgio Primiceri
Department of Economics
Northwestern University
318 Andersen Hall
2001 Sheridan Road
Evanston, IL 60208-2600
Tel: 847/491-5395
Fax: 847/491-7001
E-Mail: g-primiceri@northwestern.edu

Andrea Tambalotti
Federal Reserve Bank of New York
33 Liberty Street, 3rd Floor
New York, NY  10045
E-Mail: a.tambalotti@gmail.com
AB  - We study the driving forces of fluctuations in an estimated New Neoclassical Synthesis model of the U.S. economy with several shocks and frictions. In this model, shocks to the marginal efficiency of investment account for the bulk of fluctuations in output and hours at business cycle frequencies. Imperfect competition and, to a lesser extent, technological frictions are the key to their transmission. Labor supply shocks explain a large fraction of the variation in hours at very low frequencies, but are irrelevant over the business cycle. This is important because their microfoundations are widely regarded as unappealing.
ER  -