How does access to credit impact consumption volatility? Theory and evidence from advanced economies suggests that greater household access to finance smooths consumption. Evidence from emerging markets, where consumption is usually more volatile than income, indicates that financial reform...

This paper considers the macroeconomic effects of shocks with different persistence properties identified from surveys of expectations. Using a GARCH-in-Mean model for the US, we present persistence profiles to illustrate how news about events occurring over different time frames plays different...

In contrast with well known theoretical and empirical results, this model shows that no externalities, no (even mild) increasing returns, no variable capacity utilization, no variable effort, no consumption habit formation are needed for demand shocks to explain the main aspects of actual...

Is the importance of technology shocks in accounting for the fluctuations in output and hours sensitive to the measure of output? We investigate the contribution of technological shocks to economic fluctuations when output is defined in consumption units, as commonly used in many macroeconomic...

We use a Dixit-Stiglitz setting to show that aggregate productivity fluctuations can be generated through changes in the dispersion of firms’ productivity. When the elasticity of substitution among goods is larger than one, an increase in the dispersion raises aggregate productivity because...