TY  - JOUR
AU  - Beaudry, Paul
AU  - Lucke, Bernd
TI  - Letting Different Views about Business Cycles Compete
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14950
PY  - 2009
Y2  - May 2009
DO  - 10.3386/w14950
UR  - http://www.nber.org/papers/w14950
L1  - http://www.nber.org/papers/w14950.pdf
N1  - Author contact info:
Paul Beaudry
Bank of Canada
234 Wellington Street
Ottawa, ON, K1A 0G9
CANADA
E-Mail: Paul.Beaudry@ubc.ca

Bernd Lucke
Department of Economics
University of Hamburg
von-Melle-Park 5
D-20146 Hamburg
Germany
E-Mail: no email available
M1  - published as Paul Beaudry, Bernd Lucke. "Letting Different Views about Business Cycles Compete," in Daron Acemoglu, Kenneth Rogoff and Michael Woodford, editors, "NBER Macroeconomics Annual 2009, Volume 24" University of Chicago Press (2010)

AB  - There are several candidate explanations for macro-fluctuations. Two of the most common discussed sources are surprise changes in disembodied technology and monetary innovations. Another popular explanation is found under the heading of a preference or more generally a demand shock. More recently two other explanations have been advocated: surprise changes in investment specific technology and news about future technology growth. The aim of this paper is to provide a quantitative assessment of the relative merits of all these explanations by adopting a framework which allows them to compete. In particular, we propose a co-integrated SVAR approach that encompasses all 5 shocks and thereby offers a coherent evaluation of the dynamics they induce as well as their contribution to macro volatility. Our main finding is that surprise changes in technology, whether it be of the disembodied or embodied nature, account for very little of fluctuations. In contrast, expected changes in technology appear to be an important force, with preference/demand shocks and monetary shocks also playing non-negligible roles.
ER  -