Abstract
There is a widespread belief that changes in expectations may be an important independent driver of economic fluctuations. The news view of business cycles offers a formalization of this perspective. In this paper we discuss mechanisms by which changes in agents' information, due to the arrival of news, can cause business cycle fluctuations driven by expectational change, and we review the empirical evidence aimed at evaluating their relevance. In particular, we highlight how the literature on news and business cycles offers a coherent way of thinking about aggregate fluctuations, while at the same time we emphasize the many challenges that must be addressed before a proper assessment of the role of news in business cycles can be established
Keywords
Letting different views; Bayesian DSGE approach; Macroeconomic fluctuations; Production externalities; Technical change;
JEL codes
- D83: Search • Learning • Information and Knowledge • Communication • Belief
- D84: Expectations • Speculations
- E13: Neoclassical
- E32: Business Fluctuations • Cycles
- O33: Technological Change: Choices and Consequences • Diffusion Processes
Reference
Paul Beaudry, and Franck Portier, “News-Driven Business Cycles : Insights and Challenges”, Journal of Economic Literature, vol. 52, n. 4, December 2014, pp. 993–1074.
See also
Published in
Journal of Economic Literature, vol. 52, n. 4, December 2014, pp. 993–1074