How Important Are Sectoral Shocks?

Enghin Atalay

American Economic Journal: Macroeconomics, 2017, vol. 9, issue 4, 254-80

Abstract: I quantify the contribution of sectoral shocks to business cycle fluctuations in aggregate output. I develop and estimate a multi-industry general equilibrium model in which each industry employs the material and capital goods produced by other sectors. Using data on US industries' input prices and input choices, I find that the goods produced by different industries are complements to one another as inputs in downstream industries' production functions. These complementarities indicate that industry-specific shocks are substantially more important than previously thought, accounting for at least half of aggregate volatility.

JEL-codes: D12 D24 E23 E32 L14 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/mac.20160353
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Citations: View citations in EconPapers (291)

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Working Paper: HOW IMPORTANT ARE SECTORAL SHOCKS (2014)
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