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  3. Journal of Economic Literature
  4. December 2014
  5. News-Driven Business Cycles: Insights and Challenges

News-Driven Business Cycles: Insights and Challenges

  • Paul Beaudry
  • Franck Portier
Journal of Economic Literature
vol. 52, no. 4, December 2014
(pp. 993-1074)
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Abstract

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)

Citation

Beaudry, Paul, and Franck Portier. 2014. "News-Driven Business Cycles: Insights and Challenges." Journal of Economic Literature, 52 (4): 993-1074. DOI: 10.1257/jel.52.4.993

Additional Materials

JEL Classification

  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • D84 Expectations; Speculations
  • E13 General Aggregative Models: Neoclassical
  • E32 Business Fluctuations; Cycles
  • O33 Technological Change: Choices and Consequences; Diffusion Processes