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A Note On Growth Expectation

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  • Fujiwara, Ippei

Abstract

Recently, several researchers have succeeded in producing expectation–driven cycles by balancing the tension between the wealth effect and the substitution effect stemming from the higher expected future productivity. Especially, seminal research by Christiano et al. (“Monetary Policy and Stock Market Boom–Bust Cycles,” mimeo, Northwestern University, 2007), explains “stock market boom–bust cycles,” characterized by increases in consumption, labor inputs, investment, and stock prices relating to high expected future technology levels. We, however, show that such expectation–driven cycles are difficult to generate based on “growth expectation,” which reflects expectations of higher productivity growth rates.

Suggested Citation

  • Fujiwara, Ippei, 2010. "A Note On Growth Expectation," Macroeconomic Dynamics, Cambridge University Press, vol. 14(2), pages 242-256, April.
    • Handle: RePEc:cup:macdyn:v:14:y:2010:i:02:p:242-256_09
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    Cited by:

    1. Ali, Syed Zahid & Anwar, Sajid, 2018. "Anticipated versus unanticipated terms of trade shocks and the J-curve phenomenon," Journal of International Money and Finance, Elsevier, vol. 81(C), pages 1-19.
    2. Hirose, Yasuo & Kurozumi, Takushi, 2021. "Identifying News Shocks With Forecast Data," Macroeconomic Dynamics, Cambridge University Press, vol. 25(6), pages 1442-1471, September.
    3. Ryo Jinnai, 2011. "News Shocks, Price Levels, and Monetary Policy," Global COE Hi-Stat Discussion Paper Series gd10-173, Institute of Economic Research, Hitotsubashi University.
    4. Ippei Fujiwara & Yasuo Hirose & Mototsugu Shintani, 2011. "Can News Be a Major Source of Aggregate Fluctuations? A Bayesian DSGE Approach," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43(1), pages 1-29, February.
    5. Fabio Milani & John Treadwell, 2012. "The Effects of Monetary Policy “News” and “Surprises”," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(8), pages 1667-1692, December.
    6. Fabio Milani & John Treadwell, 2012. "The Effects of Monetary Policy “News” and “Surprises”," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 44(8), pages 1667-1692, December.

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