Record Detail

This paper empirically investigates and theoretically reflects on the
generality of some ‘‘stylized facts’’ of business cycles. Using data for 1960–2016
and a sample of OECD countries, the duration of business cycles as well as three
models capturing core macroeconomic relations are estimated: the Phillips curve
(the inflation-unemployment nexus), Okun’s law (i.e. the relation between output
growth and unemployment) and the inflation-output relation. Results are validated
by relevant statistical tests. Observed durations vary from 4.2 to 7.4 years, and
estimated coefficients differ in signs and magnitudes. An explanation of this
heterogeneity is attempted by referring to proxies for various institutional variables.
The findings suggest that core coefficients in the relations, such as the slope of the
Phillips curve, show significant correlation with some of these variables, but no
uniform results are obtained. In the detailed theoretical discussion and interpretation
it is thus argued that the notable differences between countries call the universality
of the ‘‘stylized facts’’ into question, but also that these variations cannot be
explained exhaustively by the institutional proxy variables employed here.