Mainly Employment: Survey-Based News and the Business Cycle

Riccardo M. Masolo

No 2211, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: Surprises in survey responses on news heard about business conditions explain a large share of the business cycle variation in labor market variables and real macro aggregates. They produce strong comovement in unemployment, vacancies, consumption, investment, and output, and a muted response of inflation and measured Total Factor Productivity. Reports about changes in labor market conditions are the key driver of the overall business conditions index. Vector Autoregression impulse-responses can be matched by a New-Keynesian DSGE in which individual risk is modeled explicitly and the assumption of free entry into vacancies is relaxed.

Keywords: Consumer Surveys; Unemployment; Business Cycles; Search Frictions; Individual Risk (search for similar items in EconPapers)
JEL-codes: C30 E31 E32 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2022-07
New Economics Papers: this item is included in nep-dge
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Working Paper: Mainly employment: survey-based news and the business cycle (2022)
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