Recessions and expansions are often caused or reinforced by developments in private consumption - the largest component of aggregate demand - which, as a result, varies over the business cycle. As such, an accurate measurement of the cyclical component of consumption and an understanding of its...

The empirical support for a real business cycle model with two technology shocks is evaluated using a Bayesian model averaging procedure. This procedure makes use of a finite mixture of many models within the class ofvector autoregressive (VAR) processes. The linear VAR model is extendedto...

A major aim of recent empirical modelling of the business cycle isto identify the relative importance of aggregate supply and demandshocks. Supply or technology shocks are associated with permanent(structural) effects on economic activity whereas demand shocks arerelated to temporary (cyclical)...