Sunday, August 24, 2008

A Business Cycle Theory of Business Cycle Theories

Is it me, or has there been an unusual increase in the number of good business cycle papers as of late? Consider:
  1. Market rigidities caused by firms' unwillingness to reveal information by changing prices. Hat Tip: KPC
  2. The resurgence of Real Business Cycle Theory. Hat tip: Tyler Cowen
  3. The application of Bayes Theorem seems to have helped in a number of areas. See 1 and 2.
Macro is not my general area so when I hear of a new business cycle paper, it is usually through the blogosphere, which is why they are well cited here. I put forward two possibilities:
  1. The frequency of new good BC theories is unchanged, but the current business cycle has increased their frequency of mentions on the blogosphere because of all the business cycle "trough" talk.
  2. The trough talk has more economists talking about the business cycle, producing more and better papers on it.
Is there research that shows business cycle theory papers are countercyclical? Anybody more familiar with the BCT literature and think either 1 or 2 are true?

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