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A1226
Title: Multi-sector business cycle accounting in a data-rich environment Authors:  Scott Brave - Federal Reserve Bank of Chicago (United States) [presenting]
Andrew Butters - Indiana University (United States)
David Kelley - Federal Reserve Bank of Chicago (United States)
Abstract: Motivated by a multi-sector general equilibrium model with input-output linkages,we use a mixed-frequency structural dynamic factor model to decompose U.S. macroeconomic fluctuations into the contributions of four ``wedges'' commonly used in business cycle accounting: (i) an efficiency, (ii) a labor, (iii) an investment, and (iv) a government wedge. We then evaluate the extent to which shocks to these wedges identified from a mix of short- and long-run restrictions can explain the degree of cross-sectional co-movement in a panel of 500 real economic activity indicators at business cycle frequencies.