We provide evidence that positive industry-level productivity shocks cause employment to fall in the short run in the UK economy. We use a new UK industry data(over the period 1970-2000), which covers both manufacturing and non-manufacturing industries, and identify productivity shocks using...

The markup in Canada has exhibited non-stationary movements, rising steadily since the early 1990s. This implies the presence of a permanent markup shock which causes the desired markup ratio to shift permanently. It is shown that after a permanent positive markup shock, output, per-capita...

We highlight that a broad class of DSGE models with housing and collateralized borrowing predict a fall in both house prices and consumption following positive government spending shocks. By contrast, we show that house prices and consumption in the U.S. rise persistently after identified...

We evaluate empirical evidence for costs that penalize changes in investment using US industry data. In aggregate models, such investment adjustment costs have been introduced to help account for a variety of business cycle and asset market phenomena. We consider a general adjustment cost...

Recent work based on sticky price-wage estimated dynamic stochastic general equilibrium (DSGE) models suggests investment shocks are the most important drivers of post-World War II US business cycles. Consumption, however, typically falls after an investment shock. This finding sits oddly with...

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...