Nutahara, Kengo (2009): Internal and external habits and news-driven business cycles.
This is the latest version of this item.
Download (138kB) | Preview
In many applications of habit persistence to macroeconomics, it is of little significance whether habits are internal or external. In this paper, it is shown that the distinction between internal and external habits is important in a situation wherein a shock is news about the future. An internal habit can be a source of news-driven business cycles, positive comovement in consumption, labor, investment, and output from the news about the future, whereas an external habit cannot.
|Item Type:||MPRA Paper|
|Original Title:||Internal and external habits and news-driven business cycles|
|Keywords:||Habit persistence; internal habit; external habit; news-driven business cycles|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles
E - Macroeconomics and Monetary Economics > E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment > E21 - Consumption; Saving; Wealth
|Depositing User:||Kengo Nutahara|
|Date Deposited:||08. Dec 2009 07:14|
|Last Modified:||03. Mar 2013 02:06|
Boldrin, M., L.J. Christiano, and J.D.M. Fisher, 2001, Habit persistence, asset returns, and the business cycle, American Economic Review 91, 149-166.
Christiano, L.J., M. Eichenbaum, and C.L. Evans, 2005, Nominal rigidities and the dynamic effects of a shock to monetary policy, Journal of Political Economy 113, 1-45.
Christiano, L.J., C. Ilut, R. Motto, and M. Rostagno, 2007, Monetary policy and stock market boom-bust cycles, European Central Bank Working paper Series 955.
Fujiwara, I., Y. Hirose, and M. Shintani, 2008, Can news be a major source of aggregate fluctuations? A Bayesian DSGE approach, IMES Discussion Paper No.2008-E-16, Bank of Japan.
Kobayashi, K. and K. Nutahara, 2008, Nominal rigidities, news-driven business cycles, and monetary policy, RIETI Discussion Paper 08-E-018, Research Institute of Economy, Trade and Industry (RIETI).
Schmitt-Grohe, S. and M. Uribe, 2008, What's news in business cycles?, NBER Working Paper 14215.
Smets, F. and R. Wouters, 2007, Shocks and frictions in US business cycles: A Bayesian DSGE approach, American Economic Review 97, 586-606.
Uribe, M., 2002, The price-consumption puzzle of currency pegs, Journal of Monetary Economics 49, 533-69.
Available Versions of this Item
Internal and external habits and news-driven business cycles. (deposited 07. Jan 2009 00:55)
- Internal and external habits and news-driven business cycles. (deposited 08. Dec 2009 07:14) [Currently Displayed]