Understanding Expectation‐Driven Fluctuations: A Labor‐Market Approach

Pengfei Wang

Journal of Money, Credit and Banking, 2012, vol. 44, issue 2‐3, 487-506

Abstract: This paper presents a unified analysis of neoclassical models that can generate expectation‐driven business cycles under anticipated future technology shocks (or news shocks). It shows that the ability or inability of various RBC models to generate positive comovement of aggregate variables hinges crucially on the structure of the labor market equilibrium. The analysis provides a simple and intuitive guide to understanding the existing literature and to searching for new models that can explain the data under news shocks.

Date: 2012
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https://doi.org/10.1111/j.1538-4616.2012.00497.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:44:y:2012:i:2-3:p:487-506

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