TY  - JOUR
AU  - Rotemberg,Julio J.
TI  - Stochastic Technical Progress, Nearly Smooth Trends and Distinct Business Cycles
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8919
PY  - 2002
Y2  - May 2002
UR  - http://www.nber.org/papers/w8919
L1  - http://www.nber.org/papers/w8919.pdf
N1  - Author contact info:
Julio J. Rotemberg
Graduate School of Business
Harvard University, Morgan Hall
Soldiers Field
Boston, MA  02163
Tel: 617/495-1015
Fax: 617/496-5994
E-Mail: jrotemberg@hbs.edu
AB  - This paper investigates whether it is possible to entertain simultaneously two attractive views about US GDP. The first is that long term growth in US GDP is attributable to an empirically plausible specification of random technical progress.  The second is that deviations of GDP from a fitted smooth 'trend' are mostly attributable to shocks that have only temporary effects, so that they are unrelated to the shocks to technical progress that lead to long term growth. The paper shows that these two views are not incompatible by constructing a model where stochastic technical progress (whose properties are calibrated to fit some features of US data) has essentially no effect on suitably detrended time series of GDP. The paper also studies variations in wedges between price and marginal cost that are capable of giving rise to these transitory movements.
ER  -