Paul Beaudry

We show that the joint behavior of stock prices and TFP favors a view of business cycles driven largely by a shock that does not affect productivity in the short run – and therefore does not look like a standard technology shock – but affects productivity with substantial delay – and therefore does not look like a monetary shock. One structural interpretation for this shock is that it represents news about future technological opportunities which is first captured in stock prices. This shock causes a boom in consumption, investment, and hours worked that precedes productivity growth by a few years, and explains about 50 percent of business cycle fluctuations.

In this paper, the authors address the question of whether wages are affected by labor-market conditions in a manner more consistent with a contract approach than with a standard spot market model. From a simple implicit contract model, they derive implications about the links between wages and past labor market conditions. Using individual data from the Current Population Survey and the Panel Study of Income Dynamics, the authors find that an implicit contract model with costless mobility describes these links better than either a simple spot market model or an implicit contract model with costly mobility. Copyright 1991 by University of Chicago Press.

This paper examines whether negative innovations to GNP are more or less persistent than positive innovations. We find that once we allow for the impulse response of GNP to be asymmetric, negative innovations to GNP are observed to be much less persistent than positive ones. In particular, the effect of a recession on the forecast of output is found to be negligible after only eight to twelve quarters, while the effect of a positive shock is estimated to be persistent and amplified over time. Our results may therefore help reconcile two antagonistic views about the nature of business cycle fluctuations.

This paper argues that several of the poor labor market outcomes observed in the Great Recession can be traced back to a change in the demand pattern for skilled workers that started with the tech bust of 2000. In particular, we show that around the year 2000, the demand for cognitive tasks underwent a reversal. In response, high-skilled workers moved down the occupational ladder and increasingly displaced lower-educated workers in less skill-intensive jobs. While these effects were present before the financial crisis of 2008, they became more obvious after jobs associated with the housing bubble disappeared.

There is a widespread belief that changes in expectations may be an important independent driver of economic fluctuations. The news view of business cycles offers a formalization of this perspective. In this paper we discuss mechanisms by which changes in agents' information, due to the arrival of news, can cause business cycle fluctuations driven by expectational change, and we review the empirical evidence aimed at evaluating their relevance. In particular, we highlight how the literature on news and business cycles offers a coherent way of thinking about aggregate fluctuations, while at the same time we emphasize the many challenges that must be addressed before a proper assessment of the role of news in business cycles can be established. (JEL D83, D84, E13, E32, O33)