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Do SVAR Models Justify Discarding the Technology-Shock-Driven Real Business Cycle Hypothesis?

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  • Hyeon-Seung Huh
  • David Kim

Abstract

type="main" xml:id="ecor12096-abs-0001"> This study investigates the validity of technology shocks as a driving force of US business cycle fluctuations. Using three well-known structural vector autoregression (SVAR) models, we analyse how structural shocks are associated with the variations of output and hours worked at business cycle frequencies. Empirical results reveal that technology shocks remain an important source of cyclical movements in output. Furthermore, a positive technology shock does not lead to a decline in hours worked, in contrast to previous studies. Our SVAR-based evidence does not support discarding a technology-shock-driven business cycle theory.

Suggested Citation

  • Hyeon-Seung Huh & David Kim, 2014. "Do SVAR Models Justify Discarding the Technology-Shock-Driven Real Business Cycle Hypothesis?," The Economic Record, The Economic Society of Australia, vol. 90(288), pages 98-118, March.
    • Handle: RePEc:bla:ecorec:v:90:y:2014:i:288:p:98-118
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    More about this item

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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