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Business Cycle Accounting-How important are technology shocks as a propagation mechanism? Some new evidence from Japan

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  • Suparna Chakraborty

    (University of Minnesota)

Abstract

This paper investigates the role of technology shocks as a propagation mechanism for business cycles using the new technique of business cycle accounting (BCA) and some new evidence from Japan. BCA technique enables us to model the economy as a standard growth model, but extends it to allow multiple propagation channels (referred to as wedges). Applying it to Japan during the period 1980 to 2000, I find that though technology shocks play an important role in propagating market frictions, they are by no means enough to account for the observed economic fluctuations. Investment wedges play a major role, something that standard RBC models fail to recognize and consequently tends to overemphasize the role of technology shocks.

Suggested Citation

  • Suparna Chakraborty, 2005. "Business Cycle Accounting-How important are technology shocks as a propagation mechanism? Some new evidence from Japan," Macroeconomics 0508002, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpma:0508002
    Note: Type of Document - pdf; pages: 29. This paper was previously circulated as 'Accounting for the Lost Decade in Japan'
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mac/papers/0508/0508002.pdf
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    References listed on IDEAS

    as
    1. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
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    Cited by:

    1. Erasmus Kersting, 2008. "The 1980s Recession in the UK: A Business Cycle Accounting Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 179-191, January.
    2. Roman Sustek, 2011. "Monetary Business Cycle Accounting," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 14(4), pages 592-612, October.
    3. Simona Cociuba & Alexander Ueberfeldt, 2008. "Driving Forces of the Canadian Economy: An Accounting Exercise," Staff Working Papers 08-14, Bank of Canada.

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    More about this item

    Keywords

    business cycle accounting; wedges; propagation mechanism; technology; aggregate fluctuations; japan;
    All these keywords.

    JEL classification:

    • E - Macroeconomics and Monetary Economics

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