Patents, News, and Business Cycles
We exploit information in patent applications to construct an instrumental variable for the identification of technology news shocks that relaxes all the identifying assumptions traditionally used in the literature. Our sole requirement is that no structural disturbances affect the US economy via the instrument except for contemporaneous technology news. The instrument recovers news shocks that have no effect on aggregate productivity in the short-run, but are a significant driver of its trend component. News shocks prompt a sustained business cycle expansion in anticipation of the future increase in TFP and, while not a main driver of business cycles, are responsible for a non-trivial share of economic fluctuations. The stock market prices-in news shocks on impact but consumer expectations, dragged down by labor market outcomes, take sensibly longer to adjust, consistent with the predictions of models of information frictions.
Date: 14 June 2022, 13:15 (Tuesday, 8th week, Trinity 2022)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Seminar Room A or Register for online
Speaker: Silvia Miranda-Agrippino (Bank of England)
Organising department: Department of Economics
Part of: Macroeconomics Seminar
Booking required?: Recommended
Booking url: https://zoom.us/meeting/register/tJckf-6vqTMvGN2s7IjmQmUAWfQAkRQtP2vR
Audience: Public
Editor: Emma Heritage