The slow recovery following the 2008/2009 recession has led to renewed interest in the question whether deep recessions … to large recessions. The test has more power than conventional unit root tests. We find that positive and negative shocks …

, expectations of higher future productivity raise the demand for new vintages of capital relative to old capital. Capital …

.g. output, output per hour) and a positive correlation between long-run growth expectations and cyclical activities. Existing … features comovement and mutual influence of households' growth expectations and market outcomes, which can replicate the … evidence, and suggests a critical role for shifting long-run growth expectations in business cycle fluctuations. …