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Theory Ahead of Business Cycle Measurement

Staff Report 102 | Published February 1, 1986

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Theory Ahead of Business Cycle Measurement

Abstract

Recent developments in business cycle theory are reviewed. The principal finding is that the growth model, which was developed to account for the secular patterns in important economic aggregates, displays the business cycle phenomena once it incorporates the observed randomness in the rate of technological advance. The amplitudes and serial correlation properties of fluctuations in output and employment that the growth model predicts match those historically experienced in the United States. Further, the model continues to display the growth facts it was developed to explain.


Published in: _Quarterly Review_ (Vol. 10, No. 4, Fall 1986, pp. 9-22) https://doi.org/10.21034/qr.1042. Published in: _Real business cycles: A reader_ (1998, pp. 83-96) Published in: _A macroeconomics reader_ (1997, pp. 366-388) Published in: _Time series models, causality and exogeneity_ (1997, pp. 91-104) Published in: _The rational expectations revolution: Readings from the front line_ (1994, pp. 265-287) Published in: _The new classical macroeconomics_ (Vol. 3, 1992, pp. 375-388) Published in: _Carnegie-Rochester Conference Series on Public Policy_ (Vol. 25, Autumn 1986, pp. 11-44) https://doi.org/10.1016/0167-2231(86)90035-7.