The Stylized Facts of the Monetary Variables
Kydland and Prescott in their 1990 article, “Business Cycles: Real Facts and a Monetary Myth,” argue that business cycle research took a wrong turn when it abandoned the effort to account for the cyclical behavior of aggregate data, following Tjalling Koopmans’ (1965) criticism of the methodology developed by Arthur Burns and Wesley Mitchell (1946), as being ‘measurement without theory.’ Crediting Robert Lucas (1977) with reviving interest in business cycle research, they initiated a line of research that builds on the growth theory literature and part of it involves an effort to assemble business cycle facts.
KeywordsBusiness Cycle Cyclical Behavior Nominal Interest Rate Cyclical Component Monetary Aggregate
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