We show that an otherwise standard one-sector real business cycle model with variable capital utilization and mild increasing returns-to-scale is able to generate qualitatively as well as quantitatively realistic aggregate fluctuations driven by news shocks to two formulations of future...

Multiple-equilibria macroeconomic models suggest that consumers and investors' perceptions about the state of the economy may be important independent factors for business cycles. In this paper, we examine empirically the interrelations between waves of optimism and pessimism and subsequent...

Multiple-equilibria macroeconomic models suggest that consumers and investors' perceptions about the state of the economy may be important independent factors for business cycles. In this paper, we examine empirically the interrelations between waves of optimism and pessimism and subsequent...