DP4522 Technology Shocks and Aggregate Fluctuations: How Well Does the RBC Model Fit Post-War US Data?
|Author(s):||Jordi Galí, Pau Rabanal|
|Publication Date:||August 2004|
|Keyword(s):||nominal rigidities, real business cycles, real frictions, technology shocks|
|Programme Areas:||International Macroeconomics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=4522|
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.