Recessions and recoveries in real business cycle models.

The writers assess the ability of a simple real business cycle model to produce business cycles in the classical NBER definition of the term, where recessions are periods of absolute declines in economic activity. The “phase” classification of A.F. Burns and W.C. Mitchell (1946) was employed to det...

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Published in:Economic Inquiry Vol. 33; pp. 640 - 664
Main Authors: Balke, Nathan S., Wynne, Mark A.
Format: Article
Published: Wiley-Blackwell October 1995
Subjects:
Online Access:View this record in EBSCOhost
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        10.1111/j.1465-7295.1995.tb01886.x
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          Balke, Nathan S.
          Wynne, Mark A.
      su:
        National Bureau of Economic Research
        Mathematical models of business cycles
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          National Bureau of Economic Research
          Mathematical models of business cycles
      ab: The writers assess the ability of a simple real business cycle model to produce business cycles in the classical NBER definition of the term, where recessions are periods of absolute declines in economic activity. The “phase” classification of A.F. Burns and W.C. Mitchell (1946) was employed to determine the “shape” of the business cycle and to search for asymmetries between expansions and contractions. It is demonstrated that such a model can generate business cycles of plausible duration and depth but is unable to match the actual shape of the business cycle. It is concluded that nonlinear models, such as Friedman's (1993) “plucking” model, might match the observed shape more closely.
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    language: English
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