In the Smets-Wouters DSGE Model, a Positive TFP Shock Has

Multiple Choice

In the Smets-Wouters DSGE model, a positive TFP shock has an immediate ________ but ________.

A) negative impact on hours worked; they start to rise after six quarters
B) positive impact on real GDP; growth is negative in the longer run
C) positive impact on inflation; leads to deflation later
D) effect on unemployment; hours worked per worker remains the same
E) negative impact on consumption; consumption grows later, as predicted by the permanent-income hypothesis