Skip to Main content Skip to Navigation
Preprints, Working Papers, ...

Trends and Cycles: An Historical Review of the Euro Area

Abstract : We analyze the euro area business cycle in a medium scale DSGE model where we assume two stochastic trends: one on total factor productivity and one on the inflation target of the central bank. To justify our choice of integrated trends, we test alternative specifications for both of them. We do so, estimating trends together with the model's structural parameters, to prevent estimation biases. In our estimates, business cycle fluctuations are dominated by investment specific shocks and preference shocks of households. Our results cast doubts on the view that cost push shocks dominate economic fluctuations in DSGE models and show that productivity shocks drive fluctuations on a longer term. As a conclusion, we present our estimation's historical reading of the business cycle in the euro area. This estimation gives credible explanations of major economic events since 1985.
Document type :
Preprints, Working Papers, ...
Complete list of metadata
Contributor : Spire Sciences Po Institutional Repository Connect in order to contact the contributor
Submitted on : Wednesday, December 1, 2021 - 4:41:49 AM
Last modification on : Friday, March 25, 2022 - 3:30:24 AM


Publisher files allowed on an open archive




Jean Barthélemy, Magali Marx, Aurélien Poissonnier. Trends and Cycles: An Historical Review of the Euro Area. 2009. ⟨hal-03460047⟩



Record views


Files downloads