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Business Cycle Anatomy

Author

Listed:
  • George-Marios Angeletos

    (Northwestern University [Evanston])

  • Fabrice Collard

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CNRS - Centre National de la Recherche Scientifique)

  • Harris Dellas

    (UNIBE - Universität Bern = University of Bern = Université de Berne)

Abstract

We propose a new strategy for dissecting the macroeconomic time series, provide a template for the propagation mechanism that best describes the observed business cycles, and use its properties to appraise models of both the parsimonious and the medium-scale variety. Our findings support the existence of a main business-cycle driver but rule out the following candidates for this role: technology or other shocks that map to TFP movements; news about future productivity; and inflationary demand shocks of the textbook type. Prominent members of the DSGE literature also lack the propagation mechanism seen in our anatomy of the data. Models that aim at accommodating demanddriven cycles under flexible prices appear promising.

Suggested Citation

  • George-Marios Angeletos & Fabrice Collard & Harris Dellas, 2024. "Business Cycle Anatomy," Working Papers hal-04531898, HAL.
    • Handle: RePEc:hal:wpaper:hal-04531898
    Note: View the original document on HAL open archive server: https://hal.science/hal-04531898v1
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