Journal articles on the topic 'Expectations-driven business cycles'

This paper analyzes the possibility of expectations-driven business cycles to emerge in a one-sector real business cycle model if the unique driving force is news about future income tax rates. We find that good news about labor income tax rates cannot generate expectations-driven business cycles, whereas good news about capital income tax rates can. We show that a one-sector real business cycle model enriched with (i) variable capital utilization and (ii) investment adjustment costs and driven solely by news shocks about capital income tax rates is able to generate qualitatively and quantitatively realistic business cycle fluctuations. In contrast to numerous studies in the news-driven business cycle literature, our model maintains separable preferences.

Numerous studies have sought to discover political business cycles in macroeconomic variables. Although voters' subjective economic expectations have been shown to influence their electoral decisions, no existing research has attempted to uncover cyclical patterns in citizens' economic expectations. Using survey data, I seek to determine whether expectations shift to benefit the incumbent president's electoral interest. The analyses show that the percentage of the public predicting an economic upturn increases before a presidential election. One explanation for the findings is that voters might extrapolate cyclical expectations from macroeconomic conditions that contain election-driven cycles. Yet the analyses show that expectational cycles still appear when the macroeconomic conditions are held constant. I conclude by drawing an explanation without recourse to macroeconomic cycles.

There is a widespread belief that changes in expectations may be an important independent driver of economic fluctuations. The news view of business cycles offers a formalization of this perspective. In this paper we discuss mechanisms by which changes in agents' information, due to the arrival of news, can cause business cycle fluctuations driven by expectational change, and we review the empirical evidence aimed at evaluating their relevance. In particular, we highlight how the literature on news and business cycles offers a coherent way of thinking about aggregate fluctuations, while at the same time we emphasize the many challenges that must be addressed before a proper assessment of the role of news in business cycles can be established. (JEL D83, D84, E13, E32, O33)

This paper develops a theory of expectations-driven business cycles based on learning. Agents have incomplete knowledge about how market prices are determined and shifts in expectations of future prices affect dynamics. Learning breaks the tight link between fundamentals and equilibrium prices, inducing periods of erroneous optimism or pessimism about future returns to capital and wages which subsequent data partially validate. In a real business cycle model, the theoretical framework amplifies and propagates technology shocks. Moreover, it produces agents' forecast errors consistent with business cycle properties of forecast errors for a wide range of variables from the Survey of Professional Forecasters. JEL: C53, D83, D84, E32, E37

We consider an overlapping-generations economy with two consumption goods. There are two sectors that produce a pure consumption good and a mixed good that can be either consumed or used as capital. We prove that the existence of Pareto-optimal expectations-driven fluctuations is compatible with standard sectoral technologies if the share of the pure consumption good is low enough. Following Reichlin's [Journal of Economic Theory 40 (1986), 89–102] influential conclusion, this result suggests that some fiscal policy rules can prevent business-cycle fluctuations in the economy by driving it to the optimal steady state as soon as they are announced.

This paper presents a model of business cycles driven by shocks to consumer expectations regarding aggregate productivity. Agents are hit by heterogeneous productivity shocks, they observe their own productivity and a noisy public signal regarding aggregate productivity. The public signal gives rise to “noise shocks,” which have the features of aggregate demand shocks: they increase output, employment, and inflation in the short run and have no effects in the long run. Numerical examples suggest that the model can generate sizable amounts of noise-driven volatility. (JEL D83, D84, E21, E23, E32)

We examine a general equilibrium model with collateral constraints and increasing returns to scale in production. The utility function is nonseparable, with no income effect on the consumer's choice of leisure. Unlike this model without a collateral constraint, we find that indeterminacy of equilibria is possible. Hence, business cycles can be driven by self-fulfilling expectations. This is the case for more realistic parameterizations than in previous, similar models without these features.

This study was driven by the dissimilar performance characteristics displayed by asset classes over the business cycle. The authors aim to explore assets classes on the grounds of a scientific literature review and a statistical analysis. Business cycles are divided into four stages to explore broad movements in returns of asset classes and a possible existence of asymmetrical effects of determinants within stages. Six main asset classes were analysed: US stocks, EAFE stocks, Bonds, Gold, Real Estate and Commodities. Monthly data from February 1976 to August 2011 were used for the study. The article combines business cycle and asset allocation theories by adding valuable information about performance of asset classes during different phases of the business cycle. Using the OECD Composite Leading Indicator as a business cycle measure, the authors demonstrate that different assets classes have different return/risk characteristics over the business cycle. The article demonstrates how to use the business cycle approach for investment decision-making. The OECD Composite Leading Indicator can provide significant information on market expectations and the future outlook; hence, results of this study can help every investor improve his/her performance and risk management.

Data driven organizations such as Amazon and Uber have raised the capabilities and expectations of customers to a new level by providing faster and cheaper products and services. The reviewed literature documented that 10–15% of the online products are returned and in many cases such products are not shelf-ready due to product obsolescence or slight wear and tear, thereby reducing profits. Many of these products are disposed of in landfills. There were very few publications that documented how integration of digitized product life cycle into the business model improves product returns and the remanufacturing processes. As societies continue on, environmentally responsible, digital journeys with connected devices and people, reverse supply chains and remanufacturing will play increased importance in fulfilling customers expanded expectations. The networks are evolving, wherein, data are collected from all phases of the product lifecycles from design, prototype, manufacturing, usage aftermarket, returns remanufacturing and recycling. The objective of this paper’s authors was to describe how all phases of product life cycles can be digitized to improve global reverse supply chains and remanufacturing. The authors performed a literature review and developed case studies to document current and to predict future transformational waves that will become increasingly used in many industrial sectors. The authors made recommendations about the importance of improved product design, reduced processing costs and increased use of remanufactured products based upon data on returns to manufacturers and service providers. This paper contributes to research by providing a framework of a digitized product life cycle integrated with the business process phases including remanufacturing and supported with real-world case studies for practitioners and academicians. The authors outlined potential future topics for academic researchers and practitioners, for expanding usage of digital tools in real-time predictive analytics to improve remanufacturing system’s efficiency and quality.

Purpose The food processing industry is growing with retail and catering supply chains. With the rising complexity of food products and the need to address food customization expectations, food processing systems are progressively shifting from production line to job-shops that are characterized by high flexibility and high complexity. A food job-shop system processes multiple items (i.e. raw ingredients, toppings, dressings) according to their working cycles in a typical resource and capacity constrained environment. Given the complexity of such systems, there are divergent goals of process cost optimization and of food quality and safety preservation. These goals deserve integration at both an operational and a strategic decisional perspective. The twofold purpose of this paper is to design a simulation model for food job-shop processing and to build understanding of the extant relationships between food flows and processing equipment through a real case study from the catering industry. Design/methodology/approach The authors designed a simulation tool enabling the analysis of food job-shop processing systems. A methodology based on discrete event simulation is developed to study the dynamics and behaviour of the processing systems according to an event-driven approach. The proposed conceptual model builds upon a comprehensive set of variables and key performance indicators (KPIs) that describe and measure the dynamics of the food job-shop according to a multi-disciplinary perspective. Findings This simulation identifies the job-shop bottlenecks and investigates the utilization of the working centres and product queuing through the system. This approach helps to characterize how costs are allocated in a flow-driven approach and identifies the trade-off between investments in equipment and operative costs. Originality/value The primary purpose of the proposed model relies on the definition of standard resources and operating patterns that can meet the behaviour of a wide variety of food processing equipment and tasks, thereby addressing the complexity of a food job-shop. The proposed methodology enables the integration of strategic and operative decisions between several company departments. The KPIs enable identification of the benchmark system, tracking the system performance via multi-scenario what-if simulations, and suggesting improvements through short-term (e.g. tasks scheduling, dispatching rules), mid-term (e.g. recipes review), or long-term (e.g. re-layout, working centres number) levers.

We develop business-cycle models with financial constraints, the driving force of which is news about the future (i.e., changes in expectations). We assume that an asset with fixed supply (“land”) is used as collateral, and firms need to hold collateral to finance their input costs. The latter feature introduces an interaction between the inefficiencies in the financial market and in the factor market. Good news raises the price of land today, which relaxes the collateral constraint. It, in turn, reduces the inefficiency in the labor market. If this force is sufficiently strong, the equilibrium labor supply increases. So do output, investment, and consumption. Our models also generate procyclical movement in Tobin's Q. We also show that when the news turns out to be wrong, the economy may fall into a recession.

Abstract Time series methods for identifying structural economic disturbances often require disturbances to satisfy technical conditions that can be inconsistent with economic theory. We propose replacing these conditions with a less restrictive condition called recoverability, which only requires that the disturbances can be inferred from the observable variables. As an application, we show how shifting attention to recoverability makes it possible to construct new identifying restrictions for technological and expectational disturbances. In a vector autoregressive example using post-war U.S. data, these restrictions imply that independent disturbances to expectations about future technology are a major driver of business cycles.

The expectational stability (E-stability) property of rational expectations equilibria (REE) in linear macroeconomic dynamic stochastic general equilibrium (DSGE) models is known to be sensitive to the information available to decision makers as well as the structure of the economic environment considered. Models featuring news shocks as a source of macroeconomic fluctuations depart from traditional assumptions regarding both the structure of the economy and the information set of agents. This paper investigates whether E-stability of REE is affected by either the inclusion of news shocks by themselves or the complementary structural changes. The main results find that the E-stability property of REE is robust to the inclusion (or exclusion) of news shocks and that well-known news-shock DSGE models permit REE which are simultaneously E-stable and capable of producing qualitatively realistic expectationally driven business cycles.

We propose and find that aggregate special items conveys more information about future real GDP growth than aggregate earnings before special items because the former contains advance news about future economic outcomes. A two-stage rational expectations test reveals that professional forecasters fully understand the information content of aggregate earnings before special items but underestimate that of aggregate special items when revising their GDP forecasts. Using vector autoregressions, we show that aggregate earnings before special items has predictive ability for GDP because, as suggested by previous literature, it acts as a proxy for corporate profits included in national income. In contrast, aggregate special items captures changes in the behavior of economic agents on a timely basis, which in turn have real effects on firms' investment and hiring, as well as consumers' wealth and spending. Consistent with news-driven business cycles, we find that aggregate special items produces synchronized movements across macroeconomic aggregates.

Over the past few years, the world’s leading commodity markets have seen an upward trend in prices, which may indicate the beginning of a new super-cycle or may be of a short-term nature, driven by current changes in demand and supply. Commodity super-cycles are important for the global economy, especially for macroeconomic policies in commodity-exporting countries, and are also reflected in the dynamics of international financial markets. The purpose of the article is to determine the essence and features of super-cycles in world commodity markets as well as to identify the factors that led to the increase in commodity prices in 2020-2022. To solve the objectives set in the article, a number of general scientific and special methods of scientific cognition are used, namely the method of theoretical generalization, historical and logical methods, descriptive-analytical method, analysis and synthesis, induction and deduction, abstractlogical method and method of economic-statistical analysis. The article outlines the mechanism of deployment of the conjunctural cycle in commodity markets and its connection with long cycles of business activity, which are conditioned by the implementation of revolutionary technological innovations. It discusses the dynamics of the main composite commodity indices. The factors influencing the growth of prices for commodity assets at the micro and macro levels are identified. The article traces changes in the course of commodity super-cycles during the 20th and early 21st centuries and investigates their causes. It is revealed that global inflationary processes, the dynamics of the US dollar index as well as the disruption of supply chains in international trade due to the COVID-19 pandemic had a significant impact on the global growth of commodity prices in 2020-2022. At the same time, forecasts about the recession of the global economy caused by the large-scale military aggression of russia in Ukraine and the long-term consequences of the pandemic as well as macroeconomic policies of large economies aimed at overcoming excessive inflation may somewhat cool the prices of commodity assets. To assess the sentiments and expectations of economic entities, the dynamics of the basis for WTI oil is analyzed, which gives grounds to conclude that the price fluctuations in global commodity markets in 2020-2022 are short-term in nature as well as to question the beginning of a new super-cycle. Identification and forecasts of conjunctural fluctuations in global commodity markets are important without any exaggeration for all economic entities – both for producers in making strategic as well as tactical management decisions on the development of production and in the formation of structural and macroeconomic policies of the country in order to increase the export potential of the national economy and to ensure its competitiveness.

The first thing you do when you begin your PhD is label your Endnote library “the woods.” Your supervisor has warned you: you must not get lost. I know you, your supervisor says, you’ll wander around forever, out there amongst the research. You’re too scared to tell them that you’ve already wandered off the beaten track, skirted around the signs that say "beware of the neurosis," and become entangled. According to the dictionary, neurosis is characterised by “obsessive thoughts and compulsive acts.” Perhaps you fell into this state way back at the beginning when things started getting rocky. The woods are dense now. You have a vague sense that there’s something out there, a many-headed creature with teeth—and possibly a red pen—waiting to pounce, to tear off your academic garb and reveal the fraud beneath. But the journey’s been worth it; up ahead you see a gap in the trees. You catch a glimpse of sky, and the possibilities beyond. There’s no point complaining about all of this. You’ve no one to blame but yourself; the minute you began, you were asking for trouble. This special issue of M/C Journal emerges from the Ignite10! Postgraduate Student Conference held at the Queensland University of Technology (QUT) in September 2010. The conference was titled Looking for Trouble. Postgraduate research students at QUT felt that conflict, or “trouble,” was an appropriate theme to encapsulate their endeavours in the critical and creative spheres of arts, media and social sciences at the bi-annual multidisciplinary conference. The conference was designed to spark postgraduate research culture within the Creative Industries (CI) Faculty. Ignite10! aimed to showcase the diversity of postgraduate research within the CI Faculty and provide postgraduate researchers with the opportunity to present research papers and creative works in a critical and supportive environment. As beginning research students, we are told that we need to find a research “problem” or “question.” Trouble is a synonym for “problem” and perhaps it is fitting that the research problem that we are encouraged and required to answer as students can also be substituted with the word “trouble,” as that is undoubtedly what it causes. A researcher’s contribution to knowledge relies on the ability to identify gaps in the knowledge and to be dissatisfied with what is the current status quo. A researcher seeks out trouble—not without trepidation—because they know trouble can be the site for new innovation, new approaches and new discoveries. The metaphor of a journey is an apt one, for research narratives, like fictional ones, move from a stable beginning, through complications and rising action to another point of equilibrium at the end (Brady 16). As Barbara Hardy states, narrative “should not be regarded as an aesthetic intervention used by artists, but as a primary act of mind transferred from art to life” (5). While the conference focused on the troubles encountered in the postgraduate research journey in particular, this special issue of M/C Journal has a wider focus, although these troublesome research narratives operate implicitly beneath the words. As a result, the papers in this special issue speak to the theme of trouble on two levels. Firstly, researchers identify trouble explicitly when establishing a gap in the knowledge or challenging an existing convention or practice. These papers also represent the finalisation of the implicit or personal journey through the research. They are the culmination of trouble. Each paper demonstrates one in a multiplicity of approaches to dealing with “trouble” in research across a variety of disciplines. The first paper in this edition, Ladies on the Loose: Contemporary Female Travel as a "Promiscuous" Excursion, examines the troubling nature of female travel writing and, in particular, the tendency of women travel writers to preface their work with an apology. Kate Cantrell explores the expectations and limitations placed on female travellers whose journeys outside the sphere of the home are traditionally viewed as hazardous. The problematic feeling of guilt associated with leaving the home raises questions of female travellers actively going out and looking for trouble. Cantrell analyses key travel texts including Robyn Davidson’s Tracks, Elizabeth Gilbert’s Eat, Pray, Love and several iterations of the fairytale, Little Red Riding Hood. This paper illuminates the troubling divide that still exists within the gendered practice of travel. While Kate Cantrell traversed the world of travel in her paper, Timothy Strom’s Space, Cyberspace and Interface: The Trouble with Google Maps traverses the digital world of Geographic Information Systems—in particular, Google Maps. Strom is certainly “asking for trouble” by challenging the routine behaviour of contemporary consumers. As a result of the enormous surge in smart phones, the Google Maps application is used by a staggering amount of people. According to current research in the United Kingdom, Google Maps is the leading application with 6.4 million users or 73.3% of all UK application users (ComScore). Strom’s paper raises some interesting similarities between the empires of colonial eras in the past and the current “Google Empire” of today. Advertising buys businesses substantial representation on Google Maps, yet the process lacks transparency; the scaling of business symbols, for instance, appears radically different for no apparent reason. It is indeed troubling to think of society’s tools, which most consumers use without thought, can be politically and commercially aligned. Yet Strom encounters what all of this issue’s researchers did; by challenging and exploring the cartographic elements of Google Maps and striving to make visible what is otherwise an invisible process, he has stumbled upon more questions rather than answers. Mashups are one possibility of “resistance,” Strom suggests, but ultimately it would require eliminating the product-driven ideology that underpins the corporation. This is potentially too idealistic for our increasingly globalised and consumerist society. Maree Kimberley also identifies the possibility of resistance in her paper, Neuroscience and Young Adult Fiction: A Recipe for Trouble? Kimberley identifies a troubling trend in young adult dystopian fiction that relies on neuroscientific concepts. Recent developments in neuroscience have revealed that the structure of the human brain has the ability to change in profound and long-lasting ways, a characteristic know as neuroplasticity. The adolescent brain displays this plastic quality; during adolescence skills such as impulse control and decision-making are still in a process of development. Kimberley cites examples from Scott Westerfield’s Uglies series; Brian Klass’s Dark Angel and Brian Faulkner’s Brain Jack to demonstrate that although this new discovery has the potential to empower adolescents in fictive works, affirming the notion that they have the ability to shape their own minds and behaviours, many writers of young adult dystopian fiction represent their teenager characters as having no control over the shaping of their own brains. In identifying this lack, Kimberley opens up the opportunity for a new kind of young adult writing that situates the power of neuroscience firmly in the hands of adolescents. But, she warns, teenagers challenging the authority of adults may be a recipe for trouble. Richard Carroll has already discovered trouble in his paper The Trouble with History and Fiction, which documents the on-going conflict between historians and writers of fictive history as they grapple with ways of representing the past. Carroll observes that historians and writers of historical fiction are both constructing the past through narrative forms. However, while the historian is bound by the need to verify their claims from a variety of valid sources, the writer of fiction is free to imagine and invent. In a post-modern era, historians face what Norman Denzin and Yvonna Lincoln (19) describe “as a crisis of representation.” Some historians’ self-exclusion from the imaginary have left them on shaky ground, and opened up a space for historical fiction writers like Kate Grenville to produce texts that are at once imaginative and based on historial reality. As Carroll notes, however, Grenville’s act of fictionalising history has not escaped criticism. In this paper, Carroll reminds us that an act that attempts to move between discourses, such as the fictive and the factual, is bound to cause trouble. Ariella Van Luyn’s creative work, Crocodile Hunt, occupies the borders of factual and fictive discourse that Carroll explores. Set in Brisbane, the work intertwines the personal trouble encountered by the main character, Murray, after the breakdown of his relationship, with the wider political turmoil that culminates with the bombing of the Communist Party headquarters in Brisbane in 1972. Unlike traditional historical accounts, this fictionalised history focuses on the personal and emotional response of characters. This story demonstrates the ways in which imagination can serve as a tool to negotiate the troubling gap in an historical narrative. The final inclusion in the edition is a creative work by Jarryd Luke. Although not as localised as Van Luyn’s narrative, Halfway House creatively explores troubles in its two young protagonists. Luke’s haunting short story speaks of two twins that escape an uncomfortable home life on the back of truck—in half a house being transported across the country. The narrative is troubling for many reasons. It illustrates the struggles the boys have with each other, with society, and the expectations placed upon them. The symbol of a broken house, literally cut through the middle, is a powerful one; Luke’s descriptive prose creates a troubled image of a house in crisis—hallways that lead to nowhere, rooms without doors. As Kimberley explores the more troubling side of dystopic youth fiction, Luke’s story is a disturbing image of male youth that blindly takes opportunities with no thought to where it might lead them. Ryan and Josh are certainly troubled characters, and like intrepid researchers, have no concept of what awaits them. Interestingly, they are never free of trouble, despite escaping the clutches of their violent father (for now), they encounter trouble at every turn. Trouble continues to find them, whether they are searching for it or not. What these papers share is the mapping of uncharted territories: whether it is the spaces between young adult fiction and neuroscience, or the spaces between history and fiction. Often, in attempting to chart new territories, researchers discover the extent of what remains unknown. Many of these papers, while reaching valid conclusions, also highlight the need for further research. The qualitative research journey is often characterised by “cycles of planning, acting, observing and reflecting” (Hearn et. al. 5). Troublesome research journeys are cyclic rather than linear. When researchers actively leave the path, and enter the woods, they realise that, while they are progressing forward, it is not always in a straight line. These papers have reached an end of one journey, yet signal multiple pathways for the next troubling encounter. Perhaps asking for trouble just leads to more questions. References Brady, Catherine. Logic and the Craft of Fiction. UK: Palgrave Macmillian, 2010. Comscore. GSMA Mobile Media Metrics Report Issued on UK Mobile Applications Usage. 2011. 22 Jun. 2011 ‹http://www.comscore.com/Press_Events/Press_Releases/2011/6/GSMA_Mobile_Media_Metrics_Report_Issued_on_UK_Mobile_Applications_Usage›. Denzin, Norman K., and Yvonna Lincoln. “The Discipline and Practice of Qualitative Research.” The SAGE Handbook of Qualitative Inquiry. Eds. Norman Denzin and Yvonna Lincoln. London: Sage, 2005. 1-32. Hardy, Barbara. “Towards a Poetics of Fiction.” Novel: A Forum on Fiction 2.1 (1986). 25 Jun. 2011 ‹http://www.jstor.org/stable/1344792›. Hearn, Greg, Jo Tacchi, Marcus Foth, and June Lennie. Action Research and New Media. Cresskill: Hampton Press, 2009. “Neuroses.” Dictionary.com. 2011. 25 Jun. 2011 ‹http://dictionary.reference.com/browse/neuroses›.