Levchenko, Andrei A.; Pandalai-Nayar, Nitya - Research Seminar in International Economics, University …
We propose a novel identification scheme for a non-technology business cycle shock, that we label Òsentiment.Ó This is … sentiment shock produces a business cycle in the US, with output, hours, and consumption rising following a positive shock, and … accounts for the bulk of short-run business cycle fluctuations in the US. The sentiment shock also has a significant impact on …