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
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.
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