Labour market news matters for business cycle – BoE paper
Findings suggest previous focus on productivity is too narrow
News on the labour market plays an important role in business cycle fluctuations, suggesting previous productivity-focused theories might be too narrow, research published by the Bank of England finds.
Riccardo Masolo uses the University of Michigan Survey of Consumers to explore how people respond to news on changes in business conditions. He finds such news can explain a “large share” of the variation in macroeconomic variables. The main factor driving the result is news related to the labour
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