News about aggregate demand and the business cycle

Jang-Ting Guo, Anca-Ioana Sirbu and Mark Weder

Journal of Monetary Economics, 2015, vol. 72, issue C, 83-96

Abstract: The plausibility of expectations-driven cyclical fluctuations in an otherwise standard one-sector real business cycle model with variable capital utilization and mild increasing returns-to-scale in production is examined. Due to a dominating wealth effect, our model is able to generate qualitatively as well as quantitatively realistic aggregate fluctuations driven by news impulses to future consumption demand or government spending on goods and services. When the economy is subject to anticipated total factor productivity or investment-specific technology shocks, the relative strength of the intertemporal substitution effect needs to be enhanced for our model to exhibit positive macroeconomic co-movement and business cycle statistics that are consistent with the data.

Keywords: News shocks; Aggregate demand; Business cycles (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304393215000082
Full text for ScienceDirect subscribers only

Related works:
Working Paper: News about Aggregate Demand and the Business Cycle (2014)
Working Paper: News about Aggregate Demand and the Business Cycle (2014)
Working Paper: News about Aggregate Demand and the Business Cycle (2012)
Working Paper: News about Aggregate Demand and the Business Cycle (2012)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:72:y:2015:i:c:p:83-96

DOI: 10.1016/j.jmoneco.2015.01.005

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().