News or Noise? The Missing Link | Zendy

Ryan Chahrour | Zendy; Kyle Jurado | Zendy

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News or Noise? The Missing Link

Author(s) -

Ryan Chahrour,

Kyle Jurado

Publication year - 2018

Publication title -

american economic review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 16.936

H-Index - 297

eISSN - 1944-7981

pISSN - 0002-8282

DOI - 10.1257/aer.20170792

Subject(s) - affect (linguistics) , noise (video) , economics , link (geometry) , econometrics , missing data , computer science , sociology , mathematics , statistics , artificial intelligence , computer network , communication , image (mathematics)

The literature on belief-driven business cycles treats news and noise as distinct representations of agents' beliefs. We prove they are empirically the same. Our result lets us isolate the importance of purely belief-driven fluctuations. Using three prominent estimated models, we show that existing research understates the importance of pure beliefs. We also explain how differences in both economic environment and information structure affect the estimated importance of pure beliefs.

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