Noisy Business Cycles

@article{Angeletos2010NoisyBC,
  title={Noisy Business Cycles},
  author={G. Angeletos and Jennifer La'O},
  journal={NBER Macroeconomics Annual},
  year={2010},
  volume={24},
  pages={319 - 378}
}
This paper investigates a real-business-cycle economy that features dispersed information about the underlying aggregate productivity shocks, taste shocks, and, potentially, shocks to monopoly power. We show how the dispersion of information can (i) contribute to significant inertia in the response of macroeconomic outcomes to such shocks; (ii) induce a negative short-run response of employment to productivity shocks; (iii) imply that productivity shocks explain only a small fraction of high… Expand
Information-Driven Business Cycles: How Important are Noise Shocks?
We bound the potential business cycle contribution of non-fundamental shocks to beliefs using a partial identification approach that is minimally restrictive. Firms face exogenous and endogenousExpand
Collateral Constraints and Noisy Fluctuations
Collateral constraints on firm-level investment introduce a potentially powerful two-way feedback between the financial market and the real economy. On one hand, real economic activity forms theExpand
Learning, confidence, and business cycles
We build a tractable heterogeneous-firm business cycle model where firms face Knightian uncertainty about their profitability and learn it through production. The cross-sectional mean of firm-levelExpand
Dispersed Information, Sticky Prices and Monetary Business Cycles: A Hayekian Perspective
We study the propagation of nominal shocks in a dispersed information economy where firms learn from and respond to information generated by their activities in product and factor markets. We proveExpand
Learning, Confidence, and Business Cycles
We build a tractable heterogeneous-firm business cycle model where firms face Knightian uncertainty about their profitability and learn it through production. The cross-sectional mean of firm-levelExpand
Higher Order Beliefs , Confidence , and Business Cycles ∗
This paper presents a model of business cycles driven by shocks to agents’ beliefs about economic fundamentals. Agents are hit both by common and idiosyncratic shocks. Common shocks act as confidenceExpand
EFFICIENCY WITH ENDOGENOUS INFORMATION CHOICE
We study the efficiency of equilibrium in a business cycle model where monopolistically competitive firms acquire costly information about aggregate fundamentals before making pricing and inputExpand
When Creativity Strikes: News Shocks and Business Cycle Fluctuations
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 totalExpand
Imperfect Information, Shock Heterogeneity, and Inflation Dynamics
We establish important empirical regularities on firms' expectations about aggregate and idiosyncratic components of sectoral demand using industry-level survey data for the universe of JapaneseExpand
Expectations and Fluctuations : The Role of Monetary Policy
How does the economy respond to shocks to expectations? This paper addresses this question within a cashless, monetary economy. A competitive economy features producers and consumers/workers withExpand
...
1
2
3
4
5
...

References

SHOWING 1-10 OF 133 REFERENCES
Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations
Using data for the G7 countries, I estimate conditional correlations of employment and productivity, based on a decomposition of the two series into technology and non-technology components. TheExpand
A Theory of Demand Shocks
This paper presents a model of business cycles driven by shocks to consumer expectations regarding aggregate productivity. Agents are hit by heterogeneous productivity shocks, they observe their ownExpand
Dispersed Information over the Business Cycle: Optimal Fiscal and Monetary Policy !
We study how the heterogeneity of information impacts the efficiency of the business cycle and the design of optimal fiscal and monetary policy. We do so within a model that features a standardExpand
Aggregate Shocks or Aggregate Information? Costly Information and Business Cycle Comovement
When similar patterns of expansion and contraction are observed across sectors, we call this a business cycle. Yet explaining the similarity and synchronization of these cycles across industriesExpand
Public Announcements, Adjustment Delays, and the Business Cycle (November 2002)
I study the effects of a lack of common knowledge on nominal adjustment in a dynamic price-setting game with incomplete information. In particular, I show how the speed of price adjustments followingExpand
Optimal Monetary Policy with Uncertain Fundamentals and Dispersed Information
This paper studies optimal monetary policy in a model where aggregate fluctuations are driven by the private sector's uncertainty about the economy's fundamentals. Information on aggregateExpand
Incomplete Information and Informative Pricing
This paper studies the information contained in the equilibrium aggregate price level of an economy where firms make output price decisions faced with incomplete information about economy-wideExpand
Policy with Dispersed Information
This paper studies policy in a class of economies in which information about commonly-relevant fundamentals -- such as aggregate productivity and demand conditions -- is dispersed and can not beExpand
News, Noise, and Fluctuations: An Empirical Exploration
We explore empirically models of aggregate fluctuations with two basic ingredients: agents form anticipations about the future based on noisy sources of information; these anticipations affectExpand
News, Noise, and Fluctuations: An Empirical Exploration
We explore empirically models of aggregate fluctuations with two basic ingredients: agents form anticipations about the future based on noisy sources of information; these anticipations affectExpand
...
1
2
3
4
5
...