This setting lets you change the way you view articles. You can choose to have articles open in a dialog window, a new tab, or directly in the same window.
Open in Dialog
Open in New Tab
Open in same window

American Economic Review: Vol. 103 No. 7 (December 2013)


Quick Tools:

Print Article Summary
Export Citation
Sign up for Email Alerts Follow us on Twitter


AER - All Issues

AER Forthcoming Articles

News, Noise, and Fluctuations: An Empirical Exploration

Article Citation

Blanchard, Olivier J., Jean-Paul L'Huillier, and Guido Lorenzoni. 2013. "News, Noise, and Fluctuations: An Empirical Exploration." American Economic Review, 103(7): 3045-70.

DOI: 10.1257/aer.103.7.3045


We explore empirically models of aggregate fluctuations in which consumers form anticipations about the future based on noisy sources of information and these anticipations affect output in the short run. Our objective is to separate fluctuations due to changes in fundamentals (news) from those due to temporary errors in agents' estimates (noise). We show that structural VARs cannot be used to identify news and noise shocks, but identification is possible via a method of moments or maximum likelihood. Next, we estimate our model on US data. Our results suggest that noise shocks explain a sizable fraction of short-run consumption fluctuations.

Article Full-Text Access

Full-text Article

Additional Materials


Blanchard, Olivier J. (IMF)
L'Huillier, Jean-Paul (EIEF, Rome)
Lorenzoni, Guido (Northwestern U)

JEL Classifications

D84: Expectations; Speculations
E13: General Aggregative Models: Neoclassical
E21: Macroeconomics: Consumption; Saving; Wealth
E32: Business Fluctuations; Cycles

American Economic Review

Quick Tools:

Sign up for Email Alerts

Follow us on Twitter

Subscription Information
(Institutional Administrator Access)


AER - All Issues

AER - Forthcoming Articles

Virtual Field Journals

AEA Member Login:

AEAweb | AEA Journals | Contact Us