dc.contributor.author | Angeletos, George-Marios | |
dc.contributor.author | La'O, Jennifer | |
dc.date.accessioned | 2013-11-27T16:36:25Z | |
dc.date.available | 2013-11-27T16:36:25Z | |
dc.date.issued | 2013-03 | |
dc.date.submitted | 2012-11 | |
dc.identifier.issn | 0012-9682 | |
dc.identifier.issn | 1468-0262 | |
dc.identifier.uri | http://hdl.handle.net/1721.1/82607 | |
dc.description.abstract | This paper develops a new theory of fluctuations—one that helps accommodate the notions of “animal spirits” and “market sentiment” in unique-equilibrium, rational-expectations, macroeconomic models. To this goal, we limit the communication that is embedded in a neoclassical economy by allowing trading to be random and decentralized. We then show that the business cycle may be driven by a certain type of extrinsic shocks which we call sentiments. These shocks formalize shifts in expectations of economic activity without shifts in the underlying preferences and technologies; they are akin to sunspots, but operate in unique-equilibrium models. We further show how communication may help propagate these shocks in a way that resembles the spread of fads and rumors and that gives rise to boom-and-bust phenomena. We finally illustrate the quantitative potential of our insights within a variant of the RBC model. | en_US |
dc.language.iso | en_US | |
dc.publisher | Econometric Society | en_US |
dc.relation.isversionof | http://dx.doi.org/10.3982/ecta10008 | en_US |
dc.rights | Creative Commons Attribution-Noncommercial-Share Alike 3.0 | en_US |
dc.rights.uri | http://creativecommons.org/licenses/by-nc-sa/3.0/ | en_US |
dc.source | MIT web domain | en_US |
dc.title | Sentiments | en_US |
dc.type | Article | en_US |
dc.identifier.citation | Angeletos, George-Marios and Jennifer La'O. “Sentiments.” Econometrica 81, no. 2 (2013): 739-779. | en_US |
dc.contributor.department | Massachusetts Institute of Technology. Department of Economics | en_US |
dc.contributor.mitauthor | Angeletos, George-Marios | en_US |
dc.relation.journal | Econometrica | en_US |
dc.eprint.version | Author's final manuscript | en_US |
dc.type.uri | http://purl.org/eprint/type/JournalArticle | en_US |
eprint.status | http://purl.org/eprint/status/PeerReviewed | en_US |
dspace.orderedauthors | Angeletos, George-Marios; La'O, Jennifer | en_US |
dc.identifier.orcid | https://orcid.org/0000-0002-9269-5094 | |
mit.license | OPEN_ACCESS_POLICY | en_US |
mit.metadata.status | Complete | |