News and Business Cycles in Open Economies
We study the effects of news about future total factor productivity (TFP) in a small open economy. We show that an open-economy version of the neoclassical model produces a recession in response to good news about future TFP. We propose an open-economy model that generates comovement in response to TFP news. The key elements of our model are a weak short-run wealth effect on the labor supply and adjustment costs to labor and investment. We show that our model also generates comovement in response to news about future investment-specific technical change and to "sudden stops." Copyright (c) 2008 The Ohio State University.
Year of publication: |
2008
|
---|---|
Authors: | JAIMOVICH, NIR ; REBELO, SERGIO |
Published in: |
Journal of Money, Credit and Banking. - Blackwell Publishing. - Vol. 40.2008, 8, p. 1699-1711
|
Publisher: |
Blackwell Publishing |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Can news about the future drive the business cycle?
Jaimovich, Nir, (2006)
-
Behavioral theories of the business cycle
Jaimovich, Nir, (2006)
-
News and business cycles in open economies
Jaimovich, Nir, (2007)
- More ...