ECONOMETRICA: TIME TO BUILD AND AGGREGATE FLUCTUATIONS

Finn E. Kydland, Edward Prescott

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

THAT WNE IS NOT MADE in a day has long been recognized by economists (e.g., Bohm-Bawerk [6]). But, neither are ships nor factories built in a day. A thesis of this essay is that the assumption of multiple-period construction is crucial for explaining aggregate fluctuations. A general equilibrium model is developed and fitted to U.S. quarterly data for the post-war period. The co-movements of the fluctuations for the fitted model are quantitatively consistent with the corre­ sponding co-movements for U.S. data. In addition, the serial correlations of cyclical output for the model match well with those observed.

Original languageEnglish (US)
Title of host publicationReal business cycles
Subtitle of host publicationA Reader
PublisherTaylor and Francis
Pages57-82
Number of pages26
ISBN (Electronic)9781134694792
ISBN (Print)0415165687
DOIs
StatePublished - Jan 1 2013
Externally publishedYes

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)

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