Journal of Economic Dinamics and Control
The paper “Distortions in the Neoclassical Growth Model: A Cross-Country Analysis” was accepted for publication in the Journal of Economic Dynamics and Control.
In the paper I conduct a business cycle accounting exercise for 22 OECD countries, using data at the quarterly frequency since 1970 in order evaluate the quantitative potential of different classes of models in generating business cycle fluctuations as observed in the data.
The findings suggest that modelling total factor productivity shocks and the labor wedge are still the most promising avenues of research.
Additionally, trade indicators such as trade openness and the geographical proximity between countries are very informative with regard to unexplained components of the neoclassical growth model, demonstrating the quantitative potential that theories that rationalize the relevance of such channels have for business cycle modelling.
The paper can be accessed here.