Abstract
In the Real Business Cycle approach to macroeconomic theory, the business cycle is taken to be driven by exogenous technological shocks. E.g., see Kydland and Prescott (1982), Prescott (1986). Solow (1957) showed that an observable measure of exogenous technological shocks is provided by the difference between the rate of growth of output and the share-weighted growth rates of the inputs to production if there are constant returns to scale, all input factors are fully variable, and there is perfect competition in the product and factor markets.
Material in this chapter is drawn from Altug, Ashley and Patterson (1999).
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References
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Patterson, D.M., Ashley, R.A. (2000). Dynamic Structure of Macroeconomic Technology Shocks. In: A Nonlinear Time Series Workshop. Dynamic Modeling and Econometrics in Economics and Finance, vol 2. Springer, Boston, MA. https://doi.org/10.1007/978-1-4419-8688-7_10
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DOI: https://doi.org/10.1007/978-1-4419-8688-7_10
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