Uncovering Common Cycles in Economy Boosts Forecasting Accuracy and Efficiency
The article explores how different economic factors like output, consumption, and investment move together in the short term (common cycles) and long term (common trends). By studying these patterns, researchers found that ignoring common cycles can lead to less accurate predictions about the economy. They also discovered that changes in productivity don't always have a big impact on output and investment, but they do affect consumption. Additionally, permanent shocks to output play a bigger role in unemployment fluctuations than previously believed.