| Abstract: | We evaluate the ability of a simple real business cycle model to generate business cycles in the classical NBER sense of the term, where recessions are periods of absolute declines in economic activity. We use the "phase" classification of Burns and Mitchell 1946] to determine the "shape" of the business cycle and to look for asymmetries between expansions and contractions. We show that such a model can generate business cycles of plausible duration and depth, but cannot match the actual "Shape" of the business cycle. Nonlinear models, such as Friedman's 1993] "plucking" model may more closely match the observed shape. |
