TEL  Vol.2 No.5 , December 2012
Note on Nominal Rigidities and News-Driven Business Cycles
Author(s) Kengo Nutahara*
ABSTRACT
A news-driven business cycle is a positive comovement of consumption, output, labor, and investment from the news about the future. We show that nominal rigidities, especially sticky prices, can cause it in a medium-scale DSGE economy through countercyclical movements of the price-markup. We also find that sticky wages cannot generate it, but they amplify the effects of news shocks.

Cite this paper
K. Nutahara, "Note on Nominal Rigidities and News-Driven Business Cycles," Theoretical Economics Letters, Vol. 2 No. 5, 2012, pp. 431-434. doi: 10.4236/tel.2012.25079.
References
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