Accounting for Business Cycles

Research output: Chapter in Book/Report/Conference proceedingChapter

10 Citations (Scopus)

Abstract

We elaborate on the business cycle accounting method proposed by Chari et al. (2006), clear up some misconceptions about the method, and then apply it to compare the Great Recession across OECD countries as well as to the recessions of the 1980s in these countries. We have four main findings. First, with the notable exception of the United States, Spain, Ireland, and Iceland, the Great Recession was driven primarily by the efficiency wedge. Second, in the Great Recession, the labor wedge plays a dominant role only in the United States, and the investment wedge plays a dominant role in Spain, Ireland, and Iceland. Third, in the recessions of the 1980s, the labor wedge played a dominant role only in France, the United Kingdom, and Belgium. Finally, overall in the Great Recession, the efficiency wedge played a more important role and the investment wedge played a less important role than they did in the recessions of the 1980s.

Original languageEnglish (US)
Title of host publicationHandbook of Macroeconomics, 2016
EditorsJohn B. Taylor, Harald Uhlig
PublisherElsevier B.V.
Pages1013-1063
Number of pages51
ISBN (Print)9780444594877
DOIs
StatePublished - Jan 1 2016

Publication series

NameHandbook of Macroeconomics
Volume2
ISSN (Print)1574-0048

Fingerprint

Business cycles
Great Recession
Recession
Ireland
Labor
Spain
Iceland
OECD countries
France
Business cycle accounting
Belgium

Keywords

  • Decomposition of variance
  • Efficiency wedge
  • Great Recession
  • Investment wedge
  • Labor wedge

Cite this

Brinca, P., Chari, V. V., Kehoe, P. J., & McGrattan, E. (2016). Accounting for Business Cycles. In J. B. Taylor, & H. Uhlig (Eds.), Handbook of Macroeconomics, 2016 (pp. 1013-1063). (Handbook of Macroeconomics; Vol. 2). Elsevier B.V.. https://doi.org/10.1016/bs.hesmac.2016.05.002

Accounting for Business Cycles. / Brinca, P.; Chari, V. V.; Kehoe, P. J.; McGrattan, E.

Handbook of Macroeconomics, 2016. ed. / John B. Taylor; Harald Uhlig. Elsevier B.V., 2016. p. 1013-1063 (Handbook of Macroeconomics; Vol. 2).

Research output: Chapter in Book/Report/Conference proceedingChapter

Brinca, P, Chari, VV, Kehoe, PJ & McGrattan, E 2016, Accounting for Business Cycles. in JB Taylor & H Uhlig (eds), Handbook of Macroeconomics, 2016. Handbook of Macroeconomics, vol. 2, Elsevier B.V., pp. 1013-1063. https://doi.org/10.1016/bs.hesmac.2016.05.002
Brinca P, Chari VV, Kehoe PJ, McGrattan E. Accounting for Business Cycles. In Taylor JB, Uhlig H, editors, Handbook of Macroeconomics, 2016. Elsevier B.V. 2016. p. 1013-1063. (Handbook of Macroeconomics). https://doi.org/10.1016/bs.hesmac.2016.05.002
Brinca, P. ; Chari, V. V. ; Kehoe, P. J. ; McGrattan, E. / Accounting for Business Cycles. Handbook of Macroeconomics, 2016. editor / John B. Taylor ; Harald Uhlig. Elsevier B.V., 2016. pp. 1013-1063 (Handbook of Macroeconomics).
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