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Comin, Diego, and
Mark Gertler. 2006. "Medium-Term Business Cycles."
,
96(3): 523-551.
Show Article Details
DOI: 10.1257/aer.96.3.523
Abstract:Over the postwar period, many industrialized countries have experienced significant
medium-frequency oscillations between periods of robust growth versus relative
stagnation. Conventional business cycle filters, however, tend to sweep these oscillations
into the trend. In this paper we explore whether they may, instead, reflect a
persistent response of economic activity to the high-frequency fluctuations normally
associated with the cycle. We define as the medium-term cycle the sum of the highand
medium-frequency variation in the data, and then show that these kinds of
fluctuations are substantially more volatile and persistent than are the conventional
measures. These fluctuations, further, feature significant procyclical movements in
both embodied and disembodied technological change, and research and development
(R&D), as well as the efficiency and intensity of resource utilization. We then
develop a model of medium-term business cycles. A virtue of the framework is that,
in addition to offering a unified approach to explaining the high- and mediumfrequency
variation in the data, it fully endogenizes the movements in productivity
that appear central to the persistence of these fluctuations. For comparison, we also
explore how well an exogenous productivity model can explain the facts. (JEL E3, O3)
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Authors:
Comin, Diego
Gertler, Mark
JEL Classifications:
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None
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