Investment-Specific News Shocks and U.S. Business Cycles

Nadav Ben Zeev, Hashmat Khan

Research output: Contribution to journalArticlepeer-review

37 Scopus citations

Abstract

We provide robust evidence that news shocks about future investment-specific technology (IST) constitute a significant force behind U.S. business cycles. Positive IST news shocks induce comovement, that is, raise output, consumption, investment, and hours. These shocks account for 70% of the business cycle variation in output, hours, and consumption, and 60% of the variation in investment, and have played an important role in 9 of the last 10 U.S. recessions. Our findings provide strong support for shifting focus to IST news shocks when investigating the role of news in driving U.S. business cycles.

Original languageEnglish
Pages (from-to)1443-1464
Number of pages22
JournalJournal of Money, Credit and Banking
Volume47
Issue number7
DOIs
StatePublished - 1 Oct 2015

Keywords

  • Business cycles
  • Investment-specific technology
  • News shocks

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Fingerprint

Dive into the research topics of 'Investment-Specific News Shocks and U.S. Business Cycles'. Together they form a unique fingerprint.

Cite this