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http://worldcat.org/entity/work/id/197858318

Aggregate shocks or aggregate information? costly information and business cycle comovement

Synchronized expansions and contractions across sectors define business cycles. Yet synchronization is puzzling because productivity across sectors exhibits weak correlation. While previous work examined production complementarity, our analysis explores complementarity in information acquisition. Because information about future productivity has a high fixed cost of production and a low marginal cost of replication, sectors can share the cost to forecast their sector-specific productivity. Sectors with common, aggregate information make highly correlated productions choices. By filtering out sector-specific shocks and transmitting aggregate ones, information markets amplify business-cycle comovement.

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  • "Synchronized expansions and contractions across sectors define business cycles. Yet synchronization is puzzling because productivity across sectors exhibits weak correlation. While previous work examined production complementarity, our analysis explores complementarity in information acquisition. Because information about future productivity has a high fixed cost of production and a low marginal cost of replication, sectors can share the cost to forecast their sector-specific productivity. Sectors with common, aggregate information make highly correlated productions choices. By filtering out sector-specific shocks and transmitting aggregate ones, information markets amplify business-cycle comovement."@en
  • "When similar patterns of expansion and contraction are observed across sectors, we call this a business cycle. Yet explaining the similarity and synchronization of these cycles across industries remains a puzzle. Whereas output growth across industries is highly correlated, identifiable shocks, like shocks to productivity, are far less correlated. While previous work has examined complementarities in production, we propose that sectors make similar input decisions because of complementarities in information acquisition. Because information about driving forces has a high fixed cost of production and a low marginal cost of replication, it can be more efficient for firms to share the cost of discovering common shocks than to invest in uncovering detailed sectoral information. Firms basing their decisions on this common information make highly correlated production choices. This mechanism amplifies the effects of common shocks, relative to sectoral shocks."

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  • "Aggregate shocks or aggregate information? Costly information and business cycle comovement"
  • "Aggregate shocks or aggregate information? : Costly information and business cycle comovement"
  • "Aggregate shocks or aggregate information? costly information and business cycle comovement"
  • "Aggregate shocks or aggregate information? costly information and business cycle comovement"@en
  • "Aggregate Shocks or Aggregate Information? : Costly Information and Business Cycle Comovement"
  • "Aggregate Shocks or Aggregate Information? Costly Information and Business Cycle Comovement"@en
  • "Aggregate Shocks or Aggregate Information? Costly Information and Business Cycle Comovement"
  • "Aggregate shocks or aggregate information? : costly information and business cycle comovement"@en
  • "Aggregate shocks or aggregate information? : costly information and business cycle comovement"

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