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Mainly Employment: Survey-Based News and the Business Cycle

Author

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  • Riccardo M. Masolo

    (Bank of England
    Centre for Macroeconomics (CFM))

Abstract

Surprises in survey responses on news heard about business conditions explain a large share of the business cycle variation in labor market variables and real macro aggregates. They produce strong comovement in unemployment, vacancies, consumption, investment, and output, and a muted response of inflation and measured Total Factor Productivity. Reports about changes in labor market conditions are the key driver of the overall business conditions index. Vector Autoregression impulse-responses can be matched by a New-Keynesian DSGE in which individual risk is modeled explicitly and the assumption of free entry into vacancies is relaxed.

Suggested Citation

  • Riccardo M. Masolo, 2022. "Mainly Employment: Survey-Based News and the Business Cycle," Discussion Papers 2211, Centre for Macroeconomics (CFM).
    • Handle: RePEc:cfm:wpaper:2211
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    References listed on IDEAS

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    More about this item

    Keywords

    Consumer Surveys; Unemployment; Business Cycles; Search Frictions; Individual Risk;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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