Business cycle accounting
By: V. V. Chari, Patrick J. Kehoe, and Ellen R. McGrattan.
Contributors: Kehoe, Patrick J.; McGrattan, Ellen R.
Series: Federal Reserve Bank of Minneapolis, Research Department staff report ;; 328; Staff report (Federal Reserve Bank of Minneapolis. Research Dept. : Online) ;; 328.
Publisher: Federal Reserve Bank of Minneapolis
Published: 2004
Place of publication: [Minneapolis, Minn.]
Language: eng
Format: Electronic resource
Subjects: Business cycles -- Econometric models.
Description: "We propose and demonstrate a simple method for guiding researchers in developing quantitative models of economic fluctuations.  We show that a large class of models are equivalent to a prototype growth model with time-varying wedges that resemble time-varying productivity, labor taxes, and capital income taxes.  We use data to measure these wedges, called <I>efficiency, labor, and investment wedges,</I> and then feed their measured values back into the model.  We assess the fraction of fluctuations in output, employment, and investment accounted for by these wedges during the Great Depression and the 1982 recession.  For the Depression, the efficiency and labor wedges together account for essentially all of the fluctuations; investment wedges play no role.  For the recession, the efficiency wedge plays the most important role; the other two, minor roles.  These results are not sensitive to alternative measures of capital utilization or alternative labor supply elasticities.  We argue that these results suggest that standard models of credit market frictions are unpromising avenues for business cycle fluctuations"--Federal Reserve Bank of Minneapolis web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 11/16/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.