## Output and Inflation Co-movement: An Update on Business-Cycle Stylized Facts

_IMF Working Papers, December 13, 2016_

## Source details

**Canonical URL:** [Output and Inflation Co-movement: An Update on Business-Cycle Stylized Facts](https://www.imf.org/en/publications/wp/issues/2016/12/31/output-and-inflation-co-movement-an-update-on-business-cycle-stylized-facts-44459)

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## Bibliographic details
- Authors: Michal Andrle, Jan Bruha, Serhat Solmaz
- Published: December 13, 2016
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781475560329.001

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### Authors and publication
- Authors: Michal Andrle, Jan Bruha, Serhat Solmaz
- Publication date: December 13, 2016
- Series: Working Paper No. 2016/241
- Issue: 241
- Volume: 2016
- Pages: 37
- DOI: https://doi.org/10.5089/9781475560329.001
- Stock No: WPIEA2016241
- ISBN: 9781475560329
- ISSN: 1018-5941

### Core findings
- Most business cycle fluctuations are driven by one major factor, based on documentation of strong and predictable co-movement of real variables during the business cycle in a sample of advanced economies.
- Real output and inflation co-move positively, which the authors interpret as convincing evidence for a demand story driving business cycles.
- The recent vintage of structural economic models has difficulties replicating the stylized facts documented by the authors.

### Contribution and proposed tools
- The paper proposes a simple statistic designed to compare data and models with respect to the documented co-movement patterns.
- The statistic is used to show discrepancies between the stylized facts in the data and the behavior of contemporary structural models.

### Subject areas and keywords
- Subject areas: Business cycles, Econometric analysis, Econometric models, Economic growth, Financial services, Inflation, Inflation targeting, Monetary policy, Prices, Short term interest rates
- Keywords: Business cycle; business cycle frequency; Business cycles; demand shock; demand shocks; DSGE models; dynamic principal components; Econometric models; Inflation; inflation cycle; inflation dynamics; inflation expectation; inflation gap; Inflation targeting; Short term interest rates; WP

### Availability and formats
- Format indicated on landing page: PDF available for download.
- Citation example provided in Chicago format including an accessed date of 9/17/2026.

*IMF Working Paper No. 2016/241 — Michal Andrle, Jan Bruha, Serhat Solmaz*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/output-and-inflation-co-movement-an-update-on-business-cycle-stylized-facts-44459_