When creativity strikes: news shocks and business cycle fluctuations
Silvia Miranda-Agrippino () and
Sinem Hacioglu Hoke ()
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
We use monthly US utility patent applications to construct an external instrument for identification of technology news shocks in a rich-information VAR. Technology diffuses slowly, and affects total factor productivity in an S-shaped pattern. Responsible for about a tenth of economic fluctuations at business cycle frequencies, the shock elicits a slow, but large and positive response of quantities, and a sluggish contraction in prices, followed by an endogenous easing in the monetary stance. The ensuing economic expansion substantially anticipates any material increase in TFP. Technology news are strongly priced-in in the stock market on impact, but measures of consumers’ expectations take sensibly longer to adjust, consistent with a New-Keynesian framework with nominal rigidities, and featuring informationally constrained agents.
Keywords: technology news shocks; business cycle; identification with external instruments; patents applications. (search for similar items in EconPapers)
JEL-codes: E22 E23 E32 O33 O34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://eprints.lse.ac.uk/90381/ Open access version. (application/pdf)
Working Paper: When Creativity Strikes: News Shocks and Business Cycle Fluctuations (2020)
Working Paper: When creativity strikes: news shocks and business cycle fluctuations (2019)
Working Paper: When Creativity Strikes: News Shocks and Business Cycle Fluctuations (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:90381
Access Statistics for this paper
More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().