News shocksandbusinesscycles

This paperproposesandimplementsanovelstructuralVARapproachtotheidentifica- tion ofnewsshocksaboutfuturetechnology.Thenewsshockisidentifiedastheshock orthogonaltotheinnovationincurrentutilization-adjustedTFPthatbestexplains variationinfutureTFP.Afavorablenewsshockleadstoanincreaseinconsumptionand decreasesinoutput,hours,andinvestmentonimpact–moresuggestiveofstandard DSGE modelsthanofrecentextensionsdesignedtogeneratenews-drivenbusiness cycles.Thoughnewsshocksaccountforasignificantfractionofoutputfluctuationsat mediumfrequencies,theycontributelittletoourunderstandingofrecessions