The empirical study of technology shocks is intensively conducted to evaluate plausibility of the technology-driven real business cycle hypothesis. A popular method is to identify technology shocks by the long-run restriction that those solely have permanent effects on labor productivity in the...

This paper examines whether search and matching frictions in labor markets can account for cross-country differences in business cycle properties. The particular interest is the joint effect of two institutional variables, employment protection and the replacement income of unemployed workers. I...

Recent empirical literature suggests that the degree of nominal rigidities varies over monetary policy regimes. This implies that monetary policy analysis with exogenously given nominal rigidities is subject to the Lucas critique. In a Calvo-style sticky price model, we endogenize nominal...

This paper explains the weak 'Phillips correlation' under low trend inflation.This correlation is confirmed empirically but the standard sticky price models fail to account for it. This paper extends the standard sticky price model to the case of the "smoothed off kinked" demand curve, which is...

In this paper, we calculate the potential output and the output gap using a Bayesian-estimated DSGE model of Japan's economy. The model is a two-sector growth model that takes into account growth rate shocks including investment-goods sector-specific technological progress. For bridging the gap...

Many studies of inflation dynamics assume that in the presence of competitive labor markets firms adjust labor input only at the intensive margin. We consider labor market search and examine the role of the extensive margin for inflation dynamics by estimating three models with distinct labor...

A standard growth accounting exercise indicates that, after Japan's "lost decade," its overall total-factor-productivity (TFP) growth has increased notably since 2000. This productivity revival has been limited, however, to information technology (IT) production--has not been a broad-based...

In Japan, like many other industrialized countries, output volatility declined dramatically in the 1980s. In order to investigate the cause of this decline, we decompose the variance of output growth by frequency. Our important findings are: (1) The total variance of output growth decreased,...

We estimate the output gap that is consistent with a fully specified DSGE model. Given the structural parameters estimated using Bayesian methods, we estimate the output gap that is defined as a deviation of output from its flexible-price equilibrium. Our output gap illustrates the U.S. business...

In this paper, we investigate the main features of the Italian financial cycle, extracted by means of a structural trend-cycle decomposition of the credit-to-GDP ratio, using annual observations from 1861 to 2011. In order to draw conclusions based on solid historical data, we provide a thorough...