Asymmetric business cycle turning points

Article Abstract:

A study using tests of asymmetry in terms of sharpness suggests that there is evidence of relatively sharp changes at business cycle troughs, and of more rounded changes at the peaks of cycles. The first test examines unemployment and manufacturing output, while the second test uses a Markov chain to examine business cycles. Further tests suggests stronger asymmetry after the second world war, and in the elements of the economy which are most affected by cycles. Empirical studies taking symmetry for granted should thus be treated with caution.

EXECUTIVE, LEGISLATIVE, AND GENERAL, Markov processes

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Monopolistic competition, increasing returns to scale, and the importance of productivity shocks

Article Abstract:

A study of business cycles suggests that productivity shocks have more effect on production when there is monopolistic competition with rising returns to scale, compared to standard models of business cycles. Standard models tend to assume competition and constant returns to scale. While the Solow residual is useful for understanding productivity fluctuations in standard models, it is less useful where markets are not competitive, since productivity changes are overestimated.

Noncommercial research organizations, Measurement, Industrial productivity, Monopolistic competition

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Intermediate inputs and sectoral comovement in the business cycle

Article Abstract:

A study presents a two-sector, durable and non-durable, stochastic growth model to explain positive comovement in business cycles. Monte Carlo analysis is applied using constant balanced growth parameter values that correspond to the growth path of the postwar US economy. Results reveal comovement of sectoral employment and output that is induced with persistent intermediate inputs.

Econometrics & Model Building, Research, Usage, Employment, Econometrics, Monte Carlo method, Monte Carlo methods, Production (Economics), Business models

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