Abstract
Aggregate and sectoral comovement are central features of business cycles, so the ability to generate comovement is a natural litmus test for macroeconomic models. But it is a test that most models fail. We propose a unified model that generates aggregate and sectoral comovement in response to contemporaneous and news shocks about fundamentals. The fundamentals that we consider are aggregate and sectoral total factor productivity shocks as well as investmentspecific technical change. The model has three key elements: variable capital utilization, adjustment costs to investment, and preferences that allow us to parameterize the strength of short-run wealth effects on the labor supply. (JEL E13, E20, E32).
Original language | English (US) |
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Pages (from-to) | 1097-1118 |
Number of pages | 22 |
Journal | American Economic Review |
Volume | 99 |
Issue number | 4 |
DOIs | |
State | Published - Sep 2009 |
ASJC Scopus subject areas
- Economics and Econometrics
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Replication data for: Can News about the Future Drive the Business Cycle?
Jaimovich, N. (Creator) & Rebelo, S. (Creator), ICPSR - Interuniversity Consortium for Political and Social Research, 2009
DOI: 10.3886/e113311v1, https://www.openicpsr.org/openicpsr/project/113311/version/V1/view
Dataset
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Replication data for: Can News about the Future Drive the Business Cycle?
Jaimovich, N. (Creator) & Rebelo, S. (Creator), ICPSR - Interuniversity Consortium for Political and Social Research, 2009
DOI: 10.3886/e113311, https://www.openicpsr.org/openicpsr/project/113311
Dataset