Mood swings strongly influence business cycles: Dallas Fed paper

federal-reserve

Optimism and pessimism shocks could be the main driving force behind business cycles in the US, according to a Dallas Federal Reserve paper, published on Thursday.

Paul Beaudry, Deokwoo Na and Jian Wang, the paper’s authors, note that many economic commentators view sentiments of optimism and pessimism as important drivers of business cycle fluctuations. The authors exploring this issue using sign-restriction based identification schemes to isolate macroeconomic fluctuations that appear most

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