Time to implement and aggregate fluctuations

✍ Scribed by Jean-Olivier Hairault; François Langot; Franck Portier

• Book ID: 104293529
• Publisher: Elsevier Science
• Year: 1997
• Tongue: English
• Weight: 801 KB
• Volume: 22
• Category: Article
• ISSN: 0165-1889
• DOI: 10.1016/s0165-1889(97)00054-7

✦ Synopsis

In this paper, we slightly modify the canonical RBC model by adding an implementation lag in the technology, to reproduce the fact that consumption is a leading indicator of output. Indeed, we assume that agents have today some information on the realization of the technology shock that will occur tomorrow. Today, inventions are known, and give information on the innovations which will be implemented tomorrow. The model is estimated and tested on US data by a simulated method of moments, using some suitable reconstructed data that are compatible with that model. The results are in favor of this implementation lag hypothesis: the model is not rejected by US post-war data.