Pavan, Marina; Iacoviello, Matteo - Society for Economic Dynamics - SED - 2008
productivity is lower, as in the data. Quantitatively, larger idiosyncratic shocks can explain: (1) 5 percent of the reduction in total GDP volatility since the mid 1980s; (2) more than one half of the reduction in the volatility of household investment; (3) the sharp decline in the correlation...
