Fundamental Economic Shocks and the Macroeconomy

Charles Evans and David Marshall

Journal of Money, Credit and Banking, 2009, vol. 41, issue 8, 1515-1555

Abstract: We ask how macroeconomic and financial variables respond to empirical measures of shocks to technology, labor supply, and monetary policy. These three shocks account for the preponderance of output, productivity, and price fluctuations. Only technology shocks have a permanent impact on economic activity. Labor inputs have little initial response to technology shocks. Monetary policy has a small response to technology shocks but "leans against the wind" in response to the more cyclical labor supply shock. This shock has the biggest impact on interest rates. Stock prices respond to all three shocks. Other empirical implications of our approach are discussed. Copyright (c) 2009 The Ohio State University No claim to original US government works.

Date: 2009
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Journal Article: Fundamental Economic Shocks and the Macroeconomy (2009)
Working Paper: Fundamental Economic Shocks and The Macroeconomy (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:41:y:2009:i:8:p:1515-1555

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