Can News about the Future Drive the Business Cycle?

Can News About the Future Drive the Business Cycle?∗

We propose a model that generates an economic expansion following good news about future total factor productivity (TFP) or investmentspecific technical change. The model has three key elements: variable capital utilization, adjustment costs to investment, and preferences that exhibit a weak short-run wealth effect on the labor supply. These preferences nest, as special cases, the two classes o...

Business Cycle Features In The Iranian Economy

What’s Real About the Business Cycle?

In part, this shift in the profession’s conception of what needs to be explained about business fluctuations reflects a desire to integrate the determinants of long-run economic growth and the causes of short-run economic downturns within a single unified theory of aggregate economic performance. Since improvements in overall productivity are widely acknowledged to be one of the key factors dri...

News Feature: Can animal culture drive evolution?

In Antarctic waters, a group of killer whales makes a wave big enough to knock a seal from its ice floe. Meanwhile, in the North Atlantic, another killer whale group blows bubbles and flashes white bellies to herd a school of herrings into a ball. And in the Crozet Archipelago in the Southern Ocean, still another group charges at seals on a beach, grasps the prey with their teeth, and then back...

Observed Expectations, News Shocks, and the Business Cycle

Abstract. This paper exploits information from the term structure of survey expectations to identify news shocks in a a DSGE model with rational expectations. We estimate a structural business-cycle model with price and wage stickiness. We allow for both unanticipated and anticipated components (“news”) in each structural disturbance: neutral and investment-specific technology shocks, governmen...