Real Business Cycles: A Reader

By James E. Hartley; Kevin D. Hoover et al. | Go to book overview

CHAPTER 23

Journal of Monetary Economics 33 (1994) 405-438. North-Holland

Real business cycles and the test of the Adelmans *

Robert G. King

University of Virginia, Charlottesville, VA 22903, USA

Charles I. Plosser

University of Rochester, Rochester, NY 14627, USA

Received August 1992, final version received January 1994

This paper conducts a modern variant of the test proposed and carried out by Adelman and Adelman (1959). Using the methods developed by Burns and Mitchell (1946), we see if we can distinguish between the economic series generated by an actual economy and those analogous artificial series generated by a stochastically perturbed economic model. In the case of the Adelmans, the model corresponded to the Klein-Goldberger equations. In our case, the model corresponds to a simple real business cycle model. The results indicate a fairly high degree of coincidence in key economic aggregates between the business cycle characteristics identified in actual data and those found in our simulated economy.

Key words: Business fluctuations; Business cycles; Forecasting & simulation

JEL classification: E12; E32; E37


1. Introduction

The most prominent and detailed description of business cycle regularities is due to a generation of researchers assembled by Wesley Clair Mitchell at the

Correspondence to: Charles I. Plosser, William E. Simon Graduate School of Business Administration, University of Rochester, Rochester, NY 14627, USA.

*The authors thank Marianne Baxter, Mario Crucini, and Sergio Rebelo for discussion on substantive issues involved in this research project. We thank Anna J. Schwartz and Victor Zarnowitz for aiding us in understanding the opportunities provided by the work of Gerhard Bry and Charlotte Boschan (1971). None of the preceding individuals is, however, responsible for the contents of this paper. Plosser’s support for this research is provided by the Olin Institute and The Bradley Policy Research Center at the W. E. Simon Graduate School of Business Administration. This paper is part of NBER’s research program in Financial Markets and Monetary Economics. Any opinions expressed are those of the authors and not those of the National Bureau of Economic Research.

0304-3932/94/$07.00 © 1994—Elsevier Science B. V. All rights reserved

-462-

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Real Business Cycles: A Reader
Table of contents

Table of contents

  • Title Page iii
  • Contents vii
  • Acknowledgements xi
  • Part I - Introduction 1
  • Chapter 1 - The Limits of Business Cycle Research 3
  • Notes 34
  • Chapter 2 - A User's Guide to Solving Real Business Cycle Models 43
  • Part II - The Foundations of Real Business Cycle Modeling 55
  • Chapter 3 57
  • Chapter 4 83
  • References 96
  • Chapter 5 97
  • Chapter 6 102
  • Chapter 7 108
  • Part III - Some Extensions 147
  • Chapter 8 149
  • Chapter 9 168
  • References 178
  • Chapter 10 - Current Real-Business-Cycle Theories and Aggregate Labor-Market Fluctuations 179
  • Chapter 11 - The Inflation Tax in a Real Business Cycle Model 200
  • Part IV - The Methodology of Equilibrium Business Cycle Models 217
  • Chapter 12 219
  • Chapter 13 237
  • Chapter 14 254
  • Chapter 15 272
  • Part V - The Critique of Calibration Methods 293
  • Chapter 16 295
  • Chapter 17 - Measures of Fit for Calibrated Models 302
  • Chapter 18 333
  • Chapter 19 355
  • Part VI - Testing the Real Business Cycle Model 381
  • Chapter 20 - Business Cycles: Real Facts and a Monetary Myth 383
  • References 398
  • Chapter 21 399
  • Chapter 22 - Evaluating a Real Business Cycle Model 431
  • Chapter 23 462
  • Chapter 24 496
  • Chapter 25 513
  • Chapter 26 - Did Technology Shocks Cause the 1990-1991 Recession? 533
  • Part VII - The Solow Residual 541
  • Chapter 27 - Technical Change and the Aggregate Production Function 543
  • Chapter 28 552
  • Chapter 29 564
  • Chapter 30 - Output Dynamics in Real-Business-Cycle Models 571
  • Part VIII - Filtering and Detrending 591
  • Chapter 31 - Postwar U. S. Business Cycles: an Empirical Investigation 593
  • Chapter 32 609
  • Chapter 33 626
  • Index 652
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