Chari, Varadarajan V. (contributor); … - 2008
shocks, which we term the e� ciency wedge and the labor wedge play
a central role in generating business cycle �uctuations … to be emerging on the importance of these reduced form shocks
over the business cycle. This emerging consensus implies … �uctuate sizably. In this sense, even under optimal policy, the model
will display sizable business cycle �uctuations, and …