Abstract
Most RBC models need deterministic technical progress to account for the business cycle stylized facts. Does this mean that we are to dismiss the evidence in favor of a unit root in output when we have a prior in favor of RBC models? To answer this question, we explore the usefulness of introducing an endogenous source of growth in a standard RBC model. Using a formal measure of fit, we show that doing so permits us both to reproduce some key business cycle facts and to obtain a unit root in output.
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