Working Paper Series no. 125: Can the Kydland--Prescott Model Pass the Cogley--Nason Test? (en anglais)

Abstract

This paper quantitatively evaluates the ability of a Kydland and Prescott type model with permanent technology shocks and labor wedges to reproduce output persistence together with persistent impulse response functions of output to permanent and transitory shocks. When calibrated on US labor market features, this model, in which technology shocks account for the bulk of output fluctuations, successfully passes the Cogley and Nason test.

Patrick Fève and Julien Matheron
June 2005

Classification JEL : E32, C52.

Keywords : RBC Models, Habit Leisure, Labor Wedges, Output Persistence