Did CNBC contribute to the Great Moderation or the Great Recession?

Mark Setterfield and Shyam Gouri Suresh ()
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Shyam Gouri Suresh: Department of Economics, Davidson College

No 1307, Working Papers from Trinity College, Department of Economics

Abstract: We construct a multi-agent system (MAS) model of cyclical growth in which aggregate fluctuations result from variations in activity at firm level. The latter, in turn, result from changes in the state of long run expectations (SOLE) or “animal spirits” and their effect on firms’ investment behaviour. We focus on the impact of a common source of information – analogous to the mass media – on the amplitude of aggregate fluctuations. Our results suggest that the amplitude of growth cycles is reduced by extremes of attention or inattention to aggregate economic performance, but that this relationship is subject to complicated (and possibly complex) phase transitions.

Keywords: Aggregate fluctuations; animal spirits; cyclical growth; multi-agent system; sentiment (search for similar items in EconPapers)
JEL-codes: C63 E12 E32 E37 O41 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013-03
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http://www3.trincoll.edu/repec/WorkingPapers2013/WP13-07.pdf First version, 2013 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:tri:wpaper:1307

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