Quantitative Economics
Journal Of The Econometric Society
Edited by: Stéphane Bonhomme • Print ISSN: 1759-7323 • Online ISSN: 1759-7331
Edited by: Stéphane Bonhomme • Print ISSN: 1759-7323 • Online ISSN: 1759-7331
Quantitative Economics: Jul, 2023, Volume 14, Issue 3
https://doi.org/10.3982/QE2029
p. 897-934
Ryan Chahrour, Sanjay K. Chugh, Tristan Potter
We identify the main shock driving fluctuations in long‐horizon productivity expectations, consistent with theories of TFP news. The identified shock induces strong comovement patterns in output, consumption, investment, employment, and stock prices even though TFP does not change significantly for more than 2 years. A labor search model in which wages are determined by a cash‐flow sharing rule, rather than the present value of match surplus, matches the observed responses to the news shock. The model also matches the empirical patterns of vacancies, labor force participation, hours, and job‐finding rates. The proposed wage rule is consistent with empirical responses of wages to both anticipated and unanticipated productivity changes.
Ryan Chahrour, Sanjay K. Chugh, and Tristan Potter
Ryan Chahrour, Sanjay K. Chugh, and Tristan Potter