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Demand Shocks as Technology Shocks / Yan Bai, José-Víctor Ríos-Rull, Kjetil Storesletten.
- Format:
- Book
- Author/Creator:
- Bai, Yan.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w32169.
- NBER working paper series no. w32169
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2024.
- Summary:
- We provide a macroeconomic theory where demand for goods has a productive role. A search friction prevents perfect matching between producers and potential customers. Larger demand induces more search, which in turn increases GDP and measured TFP. We embed the product-market friction in a standard neoclassical model and estimate it using Bayesian techniques. Business cycles are driven by preference shocks, true technology shocks, and investment-specific shocks. Preference shocks have qualitatively similar effects as true productivity shocks. These shocks account for a large share of the fluctuations in consumption, GDP, and measured TFP and can be identified using shopping time data.
- Notes:
- Print version record
- February 2024.
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