Justiniano, Alejandro. <br/><br/>
Investment Shocks and Business Cycles / 
Alejandro Justiniano, Giorgio E. Primiceri, Andrea Tambalotti. 
 - Cambridge, Mass.  National Bureau of Economic Research  2009. 
 - 1 online resource:  illustrations (black and white); 
 - NBER working paper series  no. w15570 .
 - Working Paper Series (National Bureau of Economic Research)  no. w15570. .
<br/><br/> December 2009. 
<br/><br/> We study the driving forces of fluctuations in an estimated New Neoclassical Synthesis model of the U.S. economy with several shocks and frictions. In this model, shocks to the marginal efficiency of investment account for the bulk of fluctuations in output and hours at business cycle frequencies. Imperfect competition and, to a lesser extent, technological frictions are the key to their transmission. Labor supply shocks explain a large fraction of the variation in hours at very low frequencies, but are irrelevant over the business cycle. This is important because their microfoundations are widely regarded as unappealing. 
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