Monetary business cycle accounting for Sweden

Monetary business cycle accounting for Sweden Abstract When creating competing models of economic fluctuations, researchers typically introduce frictions in their models aiming at replicating the observed movements in the data. This paper implements a business cycle accounting procedure for the Swedish economy. Both the 1990s and the 2008 recessions are given special focus. Evidence is provided for properties that structural extensions to the business cycle model need to have in order to replicate the movements in the data. Distortions to the labor market and movements in total factor productivity are the most determinant features to be modeled with respect to real variables as well as deviations from a Taylor rule for interest rate setting, though the latter plays little role for both the 1990s and the 2008 recessions. The distortions share a structural break during the 1990s crisis but not during the recent one. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The B.E. Journal of Macroeconomics de Gruyter

Monetary business cycle accounting for Sweden

The B.E. Journal of Macroeconomics, Volume 13 (1) – Oct 12, 2013

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Publisher
de Gruyter
Copyright
Copyright © 2013 by the
ISSN
2194-6116
eISSN
1935-1690
DOI
10.1515/bejm-2013-0027
Publisher site
See Article on Publisher Site

Abstract

Abstract When creating competing models of economic fluctuations, researchers typically introduce frictions in their models aiming at replicating the observed movements in the data. This paper implements a business cycle accounting procedure for the Swedish economy. Both the 1990s and the 2008 recessions are given special focus. Evidence is provided for properties that structural extensions to the business cycle model need to have in order to replicate the movements in the data. Distortions to the labor market and movements in total factor productivity are the most determinant features to be modeled with respect to real variables as well as deviations from a Taylor rule for interest rate setting, though the latter plays little role for both the 1990s and the 2008 recessions. The distortions share a structural break during the 1990s crisis but not during the recent one.

Journal

The B.E. Journal of Macroeconomicsde Gruyter

Published: Oct 12, 2013

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