Economics, Econometrics and Finance
4 years ago

News shocks drive synchronized economic cycles in small open economies.

RePEc: Research Papers in Economics
News-driven business cycles in small open economies
Güneş Kamber, Konstantinos Theodoridis, Christoph Thoenissen

Paper Summary

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This paper explores how news about future productivity can impact the economy of small open countries. By studying data from four advanced small open economies, the researchers found that news shocks can lead to changes in output, hours worked, consumption, and investment. These news shocks also influence the current account balance in a way that helps stabilize the economy.