Overly optimistic expectations concerning productivity and consequent downward revisions are commonly viewed as a key determinant of U.S. investment during the boom-bust cycle of 1995–2003. This view is formalized and evaluated in a general equilibrium model with news shocks about future...

Empirical industry-level studies find a systematic pattern of output and price responses to variations in oil prices. This pattern depends on the energy-intensity of production and on the origin of oil price shocks. We build a multisector business cycle model that features endogenous production...

This paper compares news and sunspot shocks as sources of exogenous changes in beliefs by analyzing equilibria of rational expectations models. The similarities and differences between the two shocks are illustrated in a New Keynesian monetary model.

While news shocks are believed to be instrumental in explaining business cycles, many existing models fail to predict an economic boom in consumption, investment, employment, output and the stock market in response to good news about future productivity. This paper proposes and evaluates a model...

In contrast to previous studies, this paper uses a multi-sector setting to assess aggregate and sectoral impacts of reducing carbon dioxide emissions in the presence of stochastic productivity shocks. We develop a multi-sector dynamic stochastic general equilibrium model, calibrated to the U.S....

Despite substantial interest in the role of energy in the economy, the degree of substitutability between energy and other production inputs, and the way energy should be included in the production function remain unresolved issues. Our study provides industry-level parameter estimates of...