Discount Shock, Price-Rent Dynamics, and the Business Cycle

We thank Mark Bils, Larry Christiano, Marty Eichenbaum, Jordi Gali, Lars Hansen, Simon Gilchrist, Pat Higgins, Lee Ohanian, Sergio Rebelo, Richard Rogerson, Giorgio Valente, Gianluca Violante, Wei Xiong, and seminar participants at University of Pennsylvania, University of North Carolina, the NBER Summer Institute, the AFR Summer Institute of Economics and Finance, the PBC Finance School of Tsinghua University, Hong Kong Monetary Authority, University of Toronto, Vanderbilt University, and University of Rochester for helpful discussions. The research is supported in part by the National Science Foundation Grant SES 1558486 through the NBER and by the National Natural Science Foundation of China Research Grants (71473168, 71473169, and 71633003). The views expressed herein are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of Atlanta or the Federal Reserve System or the National Bureau of Economic Research.

• August 13, 2014