In the context of a dynamic, stochastic, general equilibrium model, we perform classical maximum-likelihood and Bayesian estimations of the contribution of anticipated shocks to business cycles in the postwar United States. Our theoretical framework is a real-business-cycle model augmented with investment adjustment costs, variable capacity utilization, habit formation in consumption, and prefe...

The NBER business cycle dating process has traditionally mixed together the fundamental component of business cycles, changes in real output, with changes of employment. This paper makes the case that these long and variable lags disqualify for business cycle dating all the components of labor market behavior, including aggregate hours of work and payroll employment. By definition real GDP is e...

Convergence hypothesis is one of the results of neoclassical growth model, which has been examined recently. This hypothesis has two forms of absolute and conditional Beta-convergence and implies that regions with lower per capita output have higher per capita growth rates. Since there is no data for regional GDP in Iran, there has been n study to test convergence hypothesis in Iran. Our main c...

Econometric busines cycle research (EBCR) combines economic theory and measurement in the study of business cycles, i.e., up and downs in overall economic activity. EBCR has four goals: description, forecasting, policy evaluation and implementation/testing of economic theories. In this paper I assess four EBCR methods: business cycle indicators, simultaneous equations models, vector autoregress...

We compare forecasts of recessions using four different specifications of the probit model: a time invariant conditionally independent version; a business cycle specific conditionally independent model; a time invariant probit with autocorrelated errors; and a business cycle specific probit with autocorrelated errors. The more sophisticated versions of the model take into account some of the po...

I compare the canonical sunspots and real business cycle models of aggregate fluctuations. The sunspots model, distinguished by production externalities, is better able to reproduce the typical spectral shape of growth rates found in the data. However, it generates excessive investment volatility and overstates high frequency behavior in employment, investment and output series. The introductio...

This article shows – on both conceptual and empirical grounds the importance of business cycles in affecting key relationships between innovation and international performance. While periods of upswing are characterised by a well documented „virtuous circle‟ between innovation inputs, new products and export success, during downswings most of the positive relationships and feedbacks tend to bre...

This paper uses a structural, large dimensional factor model to evaluate the role of ‘news’ shocks (shocks with a delayed effect on productivity) in generating the business cycle. We find that (i) existing small-scale VECM models are affected by ‘non-fundamentalness’ and therefore fail to recover the correct shock and impulse response functions; (ii) news shocks have a limited role in explainin...