We formalize the idea that house price changes may drive rational waves of optimism and
pessimism in the economy. In our model, a house price increase caused by aggregate …

Can aggregate noise shocks produce large macroeconomic fluctuations, and if so, is there
anything that policymakers can do about them? Yes and yes, if news about idiosyncratic …

Using a simple microfounded macroeconomic model with price making firms and a central
bank maximizing the welfare of a representative household, we show that the presence of …

We present a dynamic incomplete information model where monetary and fiscal policy
instruments serve as endogenous signals for the private sector. We highlight a novel …

Can waves of optimism and pessimism produce large macroeconomic bubbles, and if so, is
there anything that policymakers can do about them? Yes and yes. I study a business cycle …

We provide a new theory of demand-driven business cycles based on learning from prices
in an otherwise frictionless real model. In our model, house price increases caused by …