| This dissertation deals with the asymmetric and nonlinear cyclical fluctuations. The main goal is to test the observation that the cyclical fluctuations are asymmetric and to explain the observed asymmetry in a well-known equilibrium fluctuation model. This dissertation has three essays.;In the first essay, the nonlinear structure of working hours and wages in an equilibrium labor market with shocks to the production technology is examined. With convex preferences and technology, hours increase at a decreasing rate with respect to the shock. Under the same conditions, wages increase either at a decreasing or at an increasing rate with respect to the shock, depending on the nature of labor supply function. The theoretical prediction is empirically tested by estimating equilibrium decision rules, and also by estimating the upward and downward elasticities of hours and real wages.;In the second essay, the third moments in actual and simulated cyclical fluctuations are examined. The main goal is to answer the question of whether a linear equilibrium model can generate the asymmetry observed in quarterly post war U.S. data. The results indicate that with respect to third moments, the RBC model fits the data better when shock is transitory than when shock is persistent.;In the third essay, assuming a stochastic trend, the asymmetric structure of business cycles is examined whether downturns are less frequent and more severe or volatile than upturns. The results indicate that the old observation is empirically true while for some variables, the asymmetric frequency is found to be weak. We also examine the possibility that a business cycle model subject to stochastic growth can simulate the observed asymmetries measured by third moments. The simulation results are mixed, but suggest that the stochastic trend seems more appropriate than a deterministic trend in matching the third moments. |
