We provide robust evidence that news shocks about future investment-specific technology (IST) constitute a significant force behind U.S. business cycles. Positive IST news shocks induce comovement, that is, raise output, consumption, investment, and hours. These shocks account for 70% of the business cycle variation in output, hours, and consumption, and 60% of the variation in investment, and have played an important role in 9 of the last 10 U.S. recessions. Our findings provide strong support for shifting focus to IST news shocks when investigating the role of news in driving U.S. business cycles.

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doi.org/10.1111/jmcb.12250
Journal of Money, Credit and Banking
Department of Economics

Ben Zeev, N. (Nadav), & Khan, H.U. (2015). Investment-Specific News Shocks and U.S. Business Cycles. Journal of Money, Credit and Banking, 47(7), 1443–1464. doi:10.1111/jmcb.12250