TY - JOUR
T1 - Nominal rigidities, news-driven business cycles, and monetary policy
AU - Kobayashi, Keiichiro
AU - Nutahara, Kengo
N1 - Copyright:
Copyright 2018 Elsevier B.V., All rights reserved.
PY - 2010
Y1 - 2010
N2 - A news-driven business cycle is a positive comovement in consumption, labor, investment, and output caused by positive news about the future. Standard real business cycle models do not generate it. In this paper, we find that a used market friction - i.e., sticky prices - can be a source of news-driven business cycles from news about future technology growth, technology level, and expansionary monetary policy shocks. The key mechanism is the countercyclical movements of markups through nominal rigidities.
AB - A news-driven business cycle is a positive comovement in consumption, labor, investment, and output caused by positive news about the future. Standard real business cycle models do not generate it. In this paper, we find that a used market friction - i.e., sticky prices - can be a source of news-driven business cycles from news about future technology growth, technology level, and expansionary monetary policy shocks. The key mechanism is the countercyclical movements of markups through nominal rigidities.
KW - news-driven business cycles
KW - nominal rigidities
KW - sticky prices
UR - http://www.scopus.com/inward/record.url?scp=77957738694&partnerID=8YFLogxK
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U2 - 10.2202/1935-1690.2094
DO - 10.2202/1935-1690.2094
M3 - Article
AN - SCOPUS:77957738694
SN - 1935-1690
VL - 10
JO - B.E. Journal of Macroeconomics
JF - B.E. Journal of Macroeconomics
IS - 1
M1 - 24
ER -