This paper contributes to the on-going empirical debate regarding the role of the RBC model and in particular of technology shocks in explaining aggregate fluctuations. To this end we estimate the model’s posterior density using Markov-Chain Monte-Carlo (MCMC) methods. Within this framework we...

In this paper, we quantitatively assess the welfare implications of alternative public education spending rules. To this end, we employ a dynamic stochastic general equilibrium model in which human capital externalities and public education expenditures, financed by distort- ing taxes, enhance...

This paper constructs and formally tests a general equilibrium model of long-term growth and endogenous fiscal policy. In this model policymakers find it optimal to keep the income tax rate constant over time. Tax revenues finance public consumption and public production services, with the...

In the time domain, the observed cyclical behavior of the real wage hides a range of economic in infuences that give rise to cycles of differing lengths and amplitudes. This may serve to produce a distorted picture of wage cyclicality. Here, we employ frequency domain methods that allow us...

In this paper we present several new measures of gross-output-based total factor (multifactor) productivity (TFP) at the sectoral level for manufacturing industries in the G7 economies. We calculate measures of both total factor productivity growth and comparative productivity levels. These are...

In the time domain, the observed cyclical behavior of the real wage hides a range of economic in uences that give rise to cycles of di ering lengths and strengths. This may serve to produce a distorted picture of wage cyclicality. Here, we employ and develop frequency domain meth- ods that allow...

In this paper we estimate industry-level VAR models at the 4- digit SIC level for a number of US manufacturing sectors, using TFP series which allow for variable factor utilisation over the cycle. This allows us to verify the relevance of alternative theoretical modelling approaches to the...

In this paper we study the link between elections, fiscal policy and economic growth/fluctuations. The set-up is a dynamic stochastic general equilibrium model of growth and endogenously chosen fiscal policy, in which two political parties can alternate in power. The party in office chooses...

We provide empirical evidence from a number of European countries, which shows that unemployment and output are positively related when unemployment is low and inversely related when unemployment is high. We then construct a stylised macro-model with goods and labour market imperfections to show...