Technology shocks and the business cycle
This article assesses the quality of the
empirical evidence provided by RBC analysts
to support their substantive claims regarding
the cyclical role of technology shocks. I argue
that the data and the methods used by these
analysts are, in fact, almost completely uninformative
about the role of technology shocks
in generating aggregate fluctuations in U.S.
output. In addition I argue that their conclusions
are not robust either to changes in the
sample period investigated or to small perturbations
in their models. For these reasons, I
conclude that the empirical results in the RBC
literature do not constitute a convincing challenge
to the traditional view regarding the
cyclical importance of aggregate demand
shocks.