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Keisuke Otsu
''How well can business cycle accounting account for business cycles?''
( 2012, Vol. 32 No.2 )
The business cycle accounting method introduced by Chari, Kehoe and McGrattan (2007) is a useful tool to decompose business cycle fluctuations into their contributing factors. However, the model estimated by the maximum likelihood method cannot replicate business cycle moments computed from data. Moment-based estimation might be an attractive alternative if the purpose of the research is to study business cycle properties such as volatility, persistence and cross-correlation of variables instead of a specific business cycle episode.
Keywords: Business Cycle Accounting; Business Cycle Moments
JEL: E3 - Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data)
E1 - General Aggregative Models: General
Manuscript Received : Dec 03 2011 Manuscript Accepted : Jun 26 2012

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