When creating competing models of economic fluctuations, researchers typically introduce frictions in their models aiming at replicating the observed movements in the data. This paper implements a business cycle accounting procedure for the Swedish economy. Both the 1990s and the 2008 recessions are given special focus. Evidence is provided for properties that structural extensions to the business cycle model need to have in order to replicate the movements in the data. Distortions to the labor market and movements in total factor productivity are the most determinant features to be modeled with respect to real variables as well as deviations from a Taylor rule for interest rate setting, though the latter plays little role for both the 1990s and the 2008 recessions. The distortions share a structural break during the 1990s crisis but not during the recent one.
Chari, V., P. Kehoe, and E. McGrattan. 2007a. “Business Cycle Accounting.” Econometrica 75: 781–836.10.1111/j.1468-0262.2007.00768.x)| false
Chari, V., P. Kehoe, and E. McGrattan. 2007b. “Comparing Alternative Representations, Methodologies and Decompositions in Business Cylce Accounting.” Federal Reserve Bank of Minneapolis Staff Reports 384.
Cho, D., and A. Doblas-Madrid. 2012. “Business Cycle Accounting East and West: Asian Finance and the Investment Wedge.” Review of Economic Dynamics, Forthcoming. Available at: http://www.economicdynamics.org/RED14.htm.
Christiano, L., and M. Eichenbaum. 1992. “Liquidity Effects and the Monetary Transmission Mechanism.” American Economic Review 82: 346–353.
Christiano, L., M. Trabandt, and K. Walentin. 2011. “Introducing Financial Frictions and Unemployment into a Small Open Economy Model.” Sveriges Riksbank Working Paper Series, 214.
Domeij, D., and M. Flodén. 2006. “Population Ageing and International Capital Flows.” International Economic Review 47 (3): 1013–1032.
Gao, X., and C. Ljungwall. 2009. “Sources of Business Cycle Fluctuactions: Comparing China and India.” China Economic Research Center Working Paper Series, May(7).
Hansen, G., and K. Singleton. 1983. “Stochastic Consumption, Risk Aversion and the Temporal Behavior of Asset Returns.” Journal of Political Economy 91: 249–265.
Hansen, G., and K. Singleton. 1983. “Stochastic Consumption, Risk Aversion and the Temporal Behavior of Asset Returns.” Journal of Political Economy 91: 249–265.10.1086/261141)| false
Hassler, J., P. Lundvik, T. Persson, and P. Söderlind. 1992. “The Swedish Business Cycle: Stylized Facts Over 130 Years.” Federal Reserve Bank of Minneapolis, Institute for Empirical Macroeconomics Discussion Papers, 63.
Hassler, J. 2010. Sweden in Past, Current and Future Economic Crisis – A Report for the OECD Economics Department. Technical report, Institute for International Economic Studies-Stockholm University.
Kobayashi, K., and M. Inaba. 2006. “Business Cycle Accounting for the Japanese Economy.” RETI Discussion Paper, 05-E-023.
Lama, R. 2009. “Accounting for Output Drops in Latin America.” IMF Working Paper Series, 67.
Mincer, Jacob A., and Victor Zarnowitz. 1969. “The evaluation of economic forecasts.” Economic Forecasts and Expectations: Analysis of Forecasting Behavior and Performance. NBER. 1-46.
Mulligan, C. 2002. “A Dual Method of Empirically Evaluating Dynamic Competitive Equilibrium Models with Market Distortions, Applied to the Great Depression and World War II.” NBER Working Paper, 8775.
Mulligan, C. 2002. “A Dual Method of Empirically Evaluating Dynamic Competitive Equilibrium Models with Market Distortions, Applied to the Great Depression and World War II.” NBER Working Paper, 8775.10.3386/w8775)| false
Otsu, K. 2009. “International Business Cycle Accounting.” IMES Discussion Paper Series, 29.
Prescott, E. C. 2002. “Prosperity and Depression.” The American Economic Review 92 (2): 1–15.