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We conducted business cycle accounting (BCA) using the method developed by Chari, Kehoe, and McGrattan (2002a) on data from the 1980s-1990s in Japan and from the interwar period in Japan and the United States. The contribution of this paper is twofold. First, we find that labor wedges may have been a major contributor to the decade-long recession in the(More)
and the Verein for Sozial Politik for their helpful comments. The authors also thank Larry Christiano, Isabel Correira, and Pedro Teles for their helpful comments. Lena Körber gratefully acknowledges financial support from Cusanuswerk, the ESRC, and the Heinz-Nixdorf Foundation. The views expressed here are the authors' and not necessarily those of the(More)
Recent research has found that the dynamics of the New Keynesian model are very different when the nominal interest rate is zero. Positive technology shocks and negative shocks to the labor tax rate lower economic activity and the size of the government purchase multiplier can be as large as four. We consider the empirical relevance of these dynamics using(More)
Using Japanese regional data, we have obtained estimates of the income elasticity of demand deposits that are positive, have values that are close to one, and are statistically significantly different from zero, not only during the period of the low interest rate policy implemented after 1995 but also during the period of the " zero interest rate policy. "(More)
A news-driven business cycle is a business cycle in which positive news about the future causes a current boom defined as simultaneous increases in consumption, labor, investment, and output. Standard real business cycle models do not generate it. In this paper, we find that a fairly popular market friction, sticky prices, can be a source of a news-driven(More)
In aggregate unadjusted data, measured Solow residuals exhibit large seasonal variations. Total Factor Productivity grows rapidly in the fourth quarter at an annual rate of 16 percent and regresses sharply in the …rst quarter at an annual rate of ¡24 percent. This paper considers two potential explanations for the measured seasonal variation in the Solow(More)
In the thirty year period between 1960 and 1990 Japan saw labor productivity rise from a level of 27 percent of the U.S. to 87 percent of the U.S. This development miracle can be explained by an initial low capital stock and measured variations in TFP. These facts motivate our investigation into the sources of Japanese TFP variations. We consider Japanese(More)
Business cycle accounting rests on the insight that the prototype neoclassical growth model with time-varying wedges can achieve the same allocation generated by a large class of frictional models: equivalence results. Equivalence results are shown under general conditions about the process of wedges while it is often specified to be the first order vector(More)
Discussion Papers are a series of manuscripts in their draft form. They are not intended for circulation or distribution except as indicated by the author. For that reason Discussion Papers may not be reproduced or distributed without the written consent of the author. Risk. " The views expressed herein are those of the author and not necessarily those of(More)