New Study Challenges Traditional Business Cycle Theories, Reveals Flaws in Popular Models
The study looked at a type of economic model called SVAR to see if it accurately reflects how technology and demand shocks affect working hours. They found that when demand shocks are significant, the SVAR model doesn't work well in predicting how the economy behaves. This suggests that the current SVAR models may not be the best way to understand how technology and demand shocks impact the business cycle.