The Relative Importance of Aggregate and Sectoral Shocks and the Changing Nature of Economic Fluctuations†

The Relative Importance of Aggregate and Sectoral Shocks and the Changing Nature of Economic... AbstractA principal components decomposition of sectoral IP data reveals that the contribution of aggregate shocks to the variance of aggregate output declined from about 70 percent in the period 1967–1983 to about 30 percent after 1983. We develop an “islands” model with two sectors and costly labor reallocation to investigate how this change in the relative importance of shocks alters business cycle moments. A version of the model with relatively more important sectoral shocks results in a sizeable decline in the cyclicality of labor productivity and is consistent with changes in several other business cycle moments observed in the data. (JEL E13, E23, E24, E32, J21, J24) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Macroeconomics American Economic Association

The Relative Importance of Aggregate and Sectoral Shocks and the Changing Nature of Economic Fluctuations†

Preview Only
30 pages

Loading next page...
 
/lp/aea/the-relative-importance-of-aggregate-and-sectoral-shocks-and-the-1c8NkmN63f
Publisher
American Economic Association
Copyright
Copyright © 2018 © American Economic Association
ISSN
1945-7715
D.O.I.
10.1257/mac.20140089
Publisher site
See Article on Publisher Site

Abstract

AbstractA principal components decomposition of sectoral IP data reveals that the contribution of aggregate shocks to the variance of aggregate output declined from about 70 percent in the period 1967–1983 to about 30 percent after 1983. We develop an “islands” model with two sectors and costly labor reallocation to investigate how this change in the relative importance of shocks alters business cycle moments. A version of the model with relatively more important sectoral shocks results in a sizeable decline in the cyclicality of labor productivity and is consistent with changes in several other business cycle moments observed in the data. (JEL E13, E23, E24, E32, J21, J24)

Journal

American Economic Journal: MacroeconomicsAmerican Economic Association

Published: Jan 1, 2018

There are no references for this article.

Sorry, we don’t have permission to share this article on DeepDyve,
but here are related articles that you can start reading right now:

Explore the DeepDyve Library

Search

Query the DeepDyve database, plus search all of PubMed and Google Scholar seamlessly

Organize

Save any article or search result from DeepDyve, PubMed, and Google Scholar... all in one place.

Access

Get unlimited, online access to over 18 million full-text articles from more than 15,000 scientific journals.

Your journals are on DeepDyve

Read from thousands of the leading scholarly journals from SpringerNature, Elsevier, Wiley-Blackwell, Oxford University Press and more.

All the latest content is available, no embargo periods.

See the journals in your area

DeepDyve

Freelancer

DeepDyve

Pro

Price

FREE

$49/month
$360/year

Save searches from
Google Scholar,
PubMed

Create lists to
organize your research

Export lists, citations

Read DeepDyve articles

Abstract access only

Unlimited access to over
18 million full-text articles

Print

20 pages / month

PDF Discount

20% off