Patents, News, and Business Cycles

Silvia Miranda-Agrippino, Hacıoğlu Hoke, Sinem and Kristina Bluwstein
Authors registered in the RePEc Author Service: Sinem Hacıoğlu Hoke

No 15062, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We exploit information in patent applications to construct an instrumental variable for the identification of technology news shocks that relaxes all the identifying assumptions traditionally used in the literature. The instrument recovers news shocks that have no effect on aggregate productivity in the short-run, but are a significant driver of its trend component. News shocks prompt a broad-based business cycle expansion in anticipation of the future increase in TFP, but only account for a modest share of fluctuations in macroeconomic aggregates at business cycle frequencies. The stock market prices-in news shocks on impact but consumer expectations, dragged down by labor market outcomes, take sensibly longer to adjust, consistent with the predictions of models of information frictions.

Keywords: Technology news shocks; Business cycle; Svar-iv; Patent applications; Information frictions (search for similar items in EconPapers)
JEL-codes: C36 E32 O33 O34 (search for similar items in EconPapers)
Date: 2020-07
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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