New model reveals how random shifts in consumer tastes drive economy
The article introduces a new idea called relative demand shocks in a model without technology changes. These shocks cause people's preferences for different products to randomly shift, affecting the economy. The model explains how these shocks can create ups and downs in the economy and why some patterns are seen in the U.S. economy. It also shows how a false measure of technological progress can be generated, even when there is none in the model.