What are the drivers of business cycle fluctuations? And how many are there? By
documenting strong and predictable co-movement of real variables during the business cycle
in a sample of advanced economies, we argue that most business cycle fluctuations are
driven by one major factor. The positive co-movement of real output and inflation
convincingly argues for a demand story. We propose a simple statistic that can compare data
and models. Based on this statistic, we show that the recent vintage of structural economic
models has difficulties replicating the stylized facts we document.