DP4522 | Technology Shocks and Aggregate Fluctuations: How Well Does the RBC Model Fit Post-War US Data?

Publication Date

23/08/2004

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Abstract

Our answer: not so well. We reach that conclusion after reviewing recent research on the role of technology as a source of economic fluctuations. The bulk of the evidence suggests a limited role for aggregate technology shocks, pointing instead to demand factors as the main force behind the strong positive co-movement between output and labor input measures.