This paper presents a business cycle model with a propagation mechanism capable of generating persistence of output growth comparable to that observed in the U.S. data. The key is that in this model consumption and labor move together not only at the impact of a shock, but also for a few periods...

In this paper I present a business cycle model with one market sector that produces a standard good, and another that produces a non--market, or home, good. The model shows that business cycles can be driven only by self fulfilling expectations, although other shocks (e.g. to technology) may...