NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Business Cycle Anatomy

George-Marios Angeletos, Fabrice Collard, Harris Dellas

NBER Working Paper No. 24875
Issued in July 2018, Revised in August 2019
NBER Program(s):Economic Fluctuations and Growth Program

We propose a new strategy for dissecting the macroeconomic time series, provide a template for the propagation mechanism that best describes the observed business cycles, 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. Prominent members of the DSGE literature also lack the propagation mechanism seen in our anatomy of the data. Models that aim at accommodating demand-driven cycles under flexible prices appear promising.

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Document Object Identifier (DOI): 10.3386/w24875

 
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