I posted on my “current work” page a new paper “Technological Diffusion News, A comment on “Whither News Shocks?” by Barsky, Basu & Lee” It is forthcoming in the NBER Macroeconomics Annual 2014, Volume 29
As written in the abstract,
Barsky, Basu, and Lee [2014] are proposing to identify a technological news shock as the innovation in the expectation of TFP at a fixed horizon in the future that does not affect TFP on impact. In response to this shock, consumption typically rises following good news, but investment, consumer durables purchases and hours worked typically fall on impact. Noticing that this shock indeed moves TFP after one period, I propose ways to identify a technological diffusion news. By diffusion news, I mean that TFP is not affected in the short to medium run but permanently increases. In response to such a shock, the economy does display an aggregate boom with typical business cycles co-movements.
The paper “Whither News Shocks?” by Barsky, Basu & Lee can be found on the NBER website.
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