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Putting the Cycle Back into Business Cycle Analysis

Portier, F; Beaudry, P; Galizia, D; (2020) Putting the Cycle Back into Business Cycle Analysis. American Economic Review , 110 (1) pp. 1-47. 10.1257/aer.20190789. Green open access

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Abstract

Are business cycles mainly a response to persistent exogenous shocks, or do they instead reflect a strong endogenous mechanism which produces recurrent boom-bust phenomena? In this paper we present evidence in favor of the second interpretation and we highlight the set of key elements that influence our answer. The elements that tend to favor this type of interpretation of business cycles are: (i) slightly extending the frequency window one associates with business cycle phenomena, (ii) allowing for strategic complementarities across agents that arise due to financial frictions, and (iii) allowing for a locally unstable steady state in estimation. JEL: E3, E32, E24

Type: Article
Title: Putting the Cycle Back into Business Cycle Analysis
Open access status: An open access version is available from UCL Discovery
DOI: 10.1257/aer.20190789
Publisher version: https://doi.org/10.1186/1744-8603-8-29
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: Business Cycle, Limit Cycle
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10077922
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