Seasonality and equilibrium business cycle theories

doi:10.1016/0165-1889(93)00792-3

Journal of Economic Dynamics and Control

Volume 19, Issue 3, April 1995, Pages 503-531

https://doi.org/10.1016/0165-1889(93)00792-3 Get rights and content

Abstract

We consider a dynamic, stochastic equilibrium business cycle model which is augmented to reflect seasonal shifts in preferences, technology, and government purchases. Our estimated parameterization implies implausibly large seasonal variation in the state of technology: rising at an annual rate of 24% in the fourth quarter and falling at an annual rate of 28% in the first quarter. Furthermore, our findings indicate that variation in the state of technology of this magnitude is required if the model is to explain the main features of the seasonal cycle.

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^∗: For helpful comments, we thank Fabio Canova, Marty Eichenbaum, Eric Ghysels, Jim Hamilton. Valerie Ramey, three anonymous referees, and seminar participants at the 1990 NBER Summer Institute, Rutgers, Queens, the Federal Reserve Bank of Chicago, and the Universities of Montreal, South Carolina, and Virginia. An earlier version of this paper was presented at the 1990 Winter Econometric Society meetings. Any opinions, findings, conclusions, or recommendations expressed herein are those of the authors and not necessarily those of the Federal Reserve Banks of Minneapolis or Chicago, or the Federal Reserve System.

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Section A: Computational methods in economics and financeSeasonality and equilibrium business cycle theories

Abstract

Fiscal policy and aggregate demand

American Economic Review

Macroeconomics

The seasonal cycle and the business cycle

Journal of Political Economy

A cross-country comparison of seasonal cycles and business cycles

Economic Journal

Seasonal unit roots in aggregate U.S. data

Journal of Econometrics

The dynamic interaction of distortionary taxes and aggregate variables in postwar U.S. data

Seasonal Solow residuals and Christmas: A case for labor hoarding and increasing returns