Professor Andrei Levchenko and alumna Nitya Pandalai-Nayar (PhD '16) were cited in Bloomberg’s article, `Econ Grapples with What Causes Recessions’ by Noah Smith. In this article, Mr. Smith postulates that macroeconomists are struggling to provide a compelling account of why recessions occur. He suggests that macroeconomists are increasingly turning to behavioral economics to better understand how and why recessions happen.
He briefly mentions the new modeling approaches that top macroeconomists are exploring, touching on the research done by Professor Levchenko and alumna Nitya Pandalai-Nayar. Their work identifies a shock to economic expectations, that they label "sentiment," and shows that movements in sentiments account for much of the short-run economic fluctuations. If you would like to read more about this research, please see their NBER working paper, TFP, News, And “Sentiments:” The International Transmission of Business Cycles.