TY  - JOUR
AU  - McCallum,Bennett T.
TI  - On "Real" and "Sticky-Price" Theories of the Business Cycle
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 1933
PY  - 1987
Y2  - February 1987
UR  - http://www.nber.org/papers/w1933
L1  - http://www.nber.org/papers/w1933.pdf
N1  - Author contact info:
Bennett T. McCallum
Tepper School of Business, Posner 256
Carnegie Mellon University
Pittsburgh, PA 15213
Tel: 412/268-2347
Fax: 412/268-6830
E-Mail: bm05@andrew.cmu.edu
AB  - This paper begins by identifying the distinguishing characteristic of the "real business cycle" (RBC) class of macroeconomic models. It then scruitinizes existing evidence, presented in support of the RBC approach, of three types: calibrated general equilibrium models with no monetary sector, vector-autoregression variance decomposition results, and univariate measurements of trend and cyclical components. It is argued that, in fact, these types of evidence have so far provided little support for the RBC hypothesis. Finally, with regard to an important alternative hypothesis concerning macroeconomic fluctuations, the paper proposes a partial rationalization for the stickiness of nominal product prices.
ER  -