Man-Bites-Dog Business Cycles

Kristoffer Nimark ()

American Economic Review, 2014, vol. 104, issue 8, 2320-67

Abstract: The newsworthiness of an event is partly determined by how unusual it is and this paper investigates the business cycle implications of this fact. Signals that are more likely to be observed after unusual events may increase both uncertainty and disagreement among agents. In a simple business cycle model, such signals can explain why we observe (i) occasional large changes in macro economic aggregate variables without a correspondingly large change in underlying fundamentals (ii) persistent periods of high macroeconomic volatility and (iii) a positive correlation between absolute changes in macro variables and the cross-sectional dispersion of survey expectations.

JEL-codes: D81 D82 D84 E23 E31 E32 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/aer.104.8.2320
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Citations: View citations in EconPapers (92)

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Related works:
Working Paper: Man-Bites-Dog Business Cycle (2015)
Working Paper: Man-bites-dog Business Cycles (2013)
Working Paper: Man-bites-dog business cycles (2012)
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