This paper studies the mood fluctuation of a typical consumer with recursive preference and the welfare cost of reduced growth and business cycle. We estimate the welfare cost using discrete recursive function as well as conduct simulation in order to compare our results with other existing...

We present evidence that weak household demand contributed to a reduction in firm and establishment entry in the Great Recession. Motivated by this evidence, we characterize aggregate growth dynamics in response to demand shocks in a broad class of endogenous growth models. We show that the...

Observed macroeconomic forecasts display gradual recognition of the long-run growth of endogenous variables (e.g. output, output per hour) and a positive correlation between long-run growth expectations and cyclical activities. Existing business cycle models appear inconsistent with the...