Inventories play an important role in business cycles. Inventory build-ups add momentum to the economy during expansions, while inventory liquidations sap economic strength during recessions. In addition, because inventory fluctuations are notoriously difficult to predict, they present...

Over the last 35 years, the U.S. economy has created service sector jobs at a faster pace than manufacturing sector jobs. Not only has this trend led to a significant shift in the composition of the labor force from manufacturing to services, but it has also fundamentally changed the...

This paper compares a set of non-nested empirical business cycle models. The alternative linear models include a VAR and Stock and Watson's (1991) unobserved components model. The alternative nonlinear models include the time-varying transition probability Markov switching model (Filardo 1993)...