TY - JOUR AU - Nunes, João Marcus Marinho PY - 1995/04/01 Y2 - 2024/03/28 TI - Unit roots, economic fluctuations, and the “persistence” of shocks JF - Brazilian Journal of Political Economy JA - BJPE VL - 15 IS - 2 SE - DO - 10.1590/0101-31571995-0816 UR - https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/1236 SP - 205-230 AB - <p>The relative importance of different shocks on the level of economic activity<br />has been a hot subject of research over the last 25 years. The traditional view, retained by<br />Keynesians and Monetarists alike, is that shocks to aggregate demand are the impulses to<br />economic fluctuations, a phenomenon independent of growth. A succession of real shocks<br />and technological transformations gave rise to what is known as Real Business Cycle Theory.<br />Proponents of real business cycles do not consider growth separately from fluctuations and<br />seek to explain economic fluctuations abstracting from monetary considerations. This paper<br />reviews the empirical evidence on the permanence of shocks. Although much can be said for<br />the interdependence between growth and fluctuations it also concludes, contrary to the RBC<br />view, that economic policy is important in generating an environment conducive to growth.</p><p><strong>JEL Classification:</strong> E13; C50.</p> ER -