This paper sets out some microfoundations for Schumpeter' s theory of innovation-driven business cycles. A model is developed to represent these cycles, which incorporates two of the three main elements of Schumpeter's analysis: innovation and profit-seeking. The third element emphasized by...

In this paper, we analyze macro-financial linkages in the euro area by implementing an innovative factor-augmented probit model estimated using a large database. In particular, our model specification enables the identification of the leading influence of financial variables on euro area...

In this paper, we attempt to analyse the relationship between house price dynamics and the business cycle. Employing a time-varying transition probability Markov switching framework, we provide empirical evidence that house price growth may prove a useful leading indicator for turning point...

We estimate a New-Neoclassical Synthesis business cycle model with two investment shocks. The first, an investment-specific technology shock, affects the transformation of consumption into investment goods and is identified with the relative price of investment. The second shock affects the...

In this paper we set up a baseline, but nevertheless advanced and complete model representing detailed goods market dynamics, heterogeneous labor markets, dual and cross-dual wage-price adjustment processes, as well as counter-cyclical government policies. The cyclical movements of output...

We construct and estimate a model that features endogenous growth and technology diffusion. The spillover effects from research and development provide a link between business cycle fluctuations and long-term growth. Therefore, productivity growth is related to the state of the economy. Shocks...

Using a dynamic factor model that allows for changes in both the long- run growth rate of output and the volatility of business cycles, we document a significant decline in long-run output growth in the United States. Our evidence supports the view that this slowdown started prior to the Great...

This paper questions the impact of trade integration on business cycle sychronization in the EMU by distinguishing increase of existing trade flows (the intensive margin) and creation of new trade flows (the extensive margin). Using a DSGE model, we find that synchronization is weakened when new...

The purpose of this paper is to analyze business cycle synchronization in the Croatian economy using various annualized growth rate variables over a period of eighteen years (1992-2010), de-trended by a Hodrick-Prescott filter, and following the Harding and Pagan methodological procedure in the...

This paper studies the unusual features of emerging economy business cycles in Asia. When we assess whether approaches from the previous literature can explain Asian business cycles, we conclude that standard models based on permanent growth shocks do not replicate key features of Asian business...