Abstract:

This paper examines to provides cyclical behavior of productivity, its determinants and its relationship with economic activity. In order to find out the relationship between productivity and business cycle, it is examined the hypothesis of Real Business Cycle (RBC) that assumes productivity shocks is the only basic source of economic fluctuations. In this paper, the effect of technology shocks on business cycles are examined employing Cointegrated VAR (VECM) methodology. Econometric results supports that a shock to output is the dominant source of business cycle fluctuations

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