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Understanding Expectation-Driven Fluctuations: A Labor-Market Approach

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  • PENGFEI WANG

Abstract

This paper presents a unified analysis of neoclassical models that can generate expectation‐driven business cycles under anticipated future technology shocks (or news shocks). It shows that the ability or inability of various RBC models to generate positive comovement of aggregate variables hinges crucially on the structure of the labor market equilibrium. The analysis provides a simple and intuitive guide to understanding the existing literature and to searching for new models that can explain the data under news shocks.
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Suggested Citation

  • Pengfei Wang, 2012. "Understanding Expectation-Driven Fluctuations: A Labor-Market Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44, pages 487-506, March.
    • Handle: RePEc:mcb:jmoncb:v:44:y:2012:i::p:487-506
    DOI: j.1538-4616.2012.00497.x
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    Cited by:

    1. Paul Beaudry & Franck Portier, 2014. "News-Driven Business Cycles: Insights and Challenges," Journal of Economic Literature, American Economic Association, vol. 52(4), pages 993-1074, December.
    2. Zhao, Ningru & Shi, Yukun & Sun, Yang & Miao, Jiaming, 2020. "Aggregate labor market fluctuations under news shocks," Economic Modelling, Elsevier, vol. 90(C), pages 397-405.
    3. Kuan‐Jen Chen & Ching‐Chong Lai, 2015. "On‐the‐Job Learning and News‐Driven Business Cycles," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(2-3), pages 261-294, March.
    4. Fan, Haichao & Gao, Xiang & Xu, Juanyi & Xu, Zhiwei, 2016. "News shock, firm dynamics and business cycles: Evidence and theory," Journal of Economic Dynamics and Control, Elsevier, vol. 73(C), pages 159-180.
    5. Dupor, Bill & Mehkari, M. Saif, 2014. "The analytics of technology news shocks," Journal of Economic Theory, Elsevier, vol. 153(C), pages 392-427.
    6. Juan Carlos Castro Fernández & Juan Carlos Castro Fern�ndez, 2022. "Financial Crises and Expectation-driven Recessions," Documentos de Trabajo UEC 20129, Universidad Externado de Colombia.
    7. Munechika Katayama & Kwang Hwan Kim, 2018. "Intersectoral Labor Immobility, Sectoral Comovement, and News Shocks," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(1), pages 77-114, February.
    8. Dai, Wei & Weder, Mark & Zhang, Bo, 2025. "Efficiency wages, consumption inequality and self-fulfilling business cycles," Journal of Macroeconomics, Elsevier, vol. 86(C).
    9. Guo, Jang-Ting & Sirbu, Anca-Ioana & Weder, Mark, 2015. "News about aggregate demand and the business cycle," Journal of Monetary Economics, Elsevier, vol. 72(C), pages 83-96.
    10. Fengqi Liu & Keqing Liu & Jianpo Xue, 2025. "Habit Formation and News-driven Business Cycles," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 56, April.
    11. Oscar Pavlov & Mark Weder, 2013. "Countercyclical Markups and News-Driven Business Cycles," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 371-382, April.
    12. Elisa Guglielminetti, 2016. "The labor market channel of macroeconomic uncertainty," Temi di discussione (Economic working papers) 1068, Bank of Italy, Economic Research and International Relations Area.
    13. Juan Carlos Castro Fernández & Juan Carlos Castro Fern�ndez, 2022. "Big Recessions and Slow Recoveries," Documentos de Trabajo UEC 20128, Universidad Externado de Colombia.
    14. Zhiwei Xu & Pengfei Wang & Jianjun Miao, 2013. "A Bayesian DSGE Model of Stock Market Bubbles and Business Cycles," 2013 Meeting Papers 167, Society for Economic Dynamics.

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