I study the macroeconomic response to news of future technological innovation under the assumption that firms cannot frictionlessly shift from existing capital stocks to new varieties associated with the impending advance in technology. Combining this new element with variable capital utilization

The paper analyses the relationship between asset prices and current account positions for a broad set of 42 industrialized and emerging market countries. It models asset price shocks as news shocks to expectations about future fundamentals in a small two-country DSGE model, in order to derive

and investigate (i) the extent to which two prominent structural VAR approaches can be useful in recuperating news shock dynamics from artificially generated data in general and (ii) why and to what extent these SVAR approaches differ in the results they deliver in particular. Thereby, we provide several insights

We estimate a dynamic stochastic general equilibrium (DSGE) model with several frictions and both unanticipated and news shocks, using quarterly US data from 1954-2004 and Bayesian methods. We find that unanticipated shocks dominate news shocks in accounting for the unconditional variance of output

that two shocks are sufficient to explain virtually all movements in the slope. Impulse response functions for the first shock, which explains 70-90 percent of the movements in the slope, lead us to interpret this main shock as a news shock about future productivity. We confirm this interpretation

We study exchange rate and equity price volatility, in general equilibrium, in the presence of news shocks about future productivity and monetary policy. While in a partial equilibrium present discounted value model the provision of news about the future cash flow reduces asset price volatility

standard DSGE model with a financial channel that provides amplification to news shocks. Both methodologies suggest news shocks to the future growth prospects of the economy to be significant drivers of U.S. business cycles in the post-Greenspan era (1990-2011), explaining as much as 50 % of the forecast

This paper explores the effect of news shocks on the current account and other macroeconomic variables using worldwide giant oil discoveries as a directly observable measure of news shocks about future output ̶ the delay between a discovery and production is on average 4 to 6 years. We first

Abstract News about future increases in Total Factor Productivity (TFP) lead to a large and persistent drop in both in ‡ation and the Federal funds rate. We show that a DSGE model with nominal rigidities and a standard parametrization along the lines of Smets and Wouters

This paper presents a model in which improvement in the future TFP is, on impact, associated with increases in consumption, stock prices, and real wages, and decreases in GDP, investment, hours worked, and inflation. These predictions are consistent with empirical findings of Barsky and Sims. The model features research and development, sticky nominal wages, and the monetary authority responding to inflation and consumption growth. The proposed policy rule fits the actual Federal Funds rate as closely as an alternative policy rule responding to inflation and GDP growth, and is better at reducing distortion due to the nominal wage stickiness.