Aggregate demand shocks, private signals and employment variability: Can better information be harmful?

2008 ◽  
Vol 100 (1) ◽  
pp. 101-104 ◽  
Author(s):  
Jonathan G. James ◽  
Phillip Lawler
Keyword(s):  
Aggregate Demand ◽  
Demand Shocks ◽  
Private Signals

scholarly journals The Response of G7 Real Exchange Rates to Oil Price Shocks

2018 ◽  
Vol 10 (4) ◽  
pp. 191
Author(s):  
Moayad H. Al Rasasi
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Exchange Rates ◽  
Forecast Error ◽  
Supply And Demand ◽  
Real Exchange Rates ◽  
Aggregate Demand ◽  
Demand Shocks ◽  
Oil Supply ◽  
Exchange Rate Shocks

This paper evaluates the response of G7 real exchange rates to oil supply and demand shocks developed by Kilian (2009). We find evidence suggesting that oil shocks are associated with the appreciation (depreciation) of real exchange rates for oil exporting (importing) countries. Further evidence, based on the analysis of forecast error variance decomposition, indicates that oil-specific demand shocks are the main contributor to variation in real exchange rates, whereas oil supply shocks contribute the least. Finally, regarding the role of monetary policy in responding to oil and exchange rate shocks, we find evidence showing monetary policy reacts only to oil-specific demand and aggregate demand shocks in three countries, whereas monetary policy responds to real exchange rate fluctuations in four countries.

DO GLOBAL CRUDE OIL MARKET SHOCKS HAVE DIFFERENTIAL EFFECTS ON US REGIONS?

2017 ◽  
Vol 23 (5) ◽  
pp. 1978-2008 ◽  
Author(s):  
Bebonchu Atems ◽  
Mark Melichar
Keyword(s):  
Crude Oil ◽  
Aggregate Demand ◽  
Personal Income ◽  
Oil Shocks ◽  
Demand And Supply ◽  
Demand Shocks ◽  
Industrial Composition ◽  
Oil Market ◽  
Supply Shocks ◽  
Market Shocks

The paper investigates whether US regions respond differently to shocks in the crude oil market. We disentangle oil market shocks into distinct demand and supply shocks and examine the response of regional personal income to these shocks. Results indicate that for most regions, oil supply shocks decrease real personal income. Except for the Rocky Mountains and the Southwest, global aggregate demand shocks are recessionary, typically about a year and a half after the shock. When we split our data into oil-producing and non-oil-producing regions, we find that global aggregate demand shocks have no effect on oil-producing regions but cause a decrease in income in non-oil-producing regions. Our analysis further indicates that oil-specific demand shocks have positive and persistent impacts on oil-producing regions but are recessionary in non-oil-producing regions. We also document significant asymmetries in the regional responses to small versus large oil shocks. In addition, the paper shows that regional differences in industrial composition explain some of the variation in the responses of real regional personal income to oil shocks.

scholarly journals Uncertainty Shocks are Aggregate Demand Shocks

2012 ◽  
pp. 01-32 ◽  
Author(s):  
Sylvain Leduc ◽  
◽  
Zheng Liu ◽  
Keyword(s):  
Aggregate Demand ◽  
Demand Shocks ◽  
Uncertainty Shocks

scholarly journals State of Shocks Synchronization among Members of the GCC

2017 ◽  
Vol 8 (1) ◽  
pp. 15
Author(s):  
Ashraf Nakibullah
Keyword(s):  
Supply And Demand ◽  
Aggregate Demand ◽  
Oil Price ◽  
Model Specification ◽  
Structural Shocks ◽  
Demand Shocks ◽  
Gcc Countries ◽  
Aggregate Supply ◽  
Supply And Demand Shocks ◽  
Svar Model

This paper examines fluctuations of aggregate supply and demand shocks across the GCC countries. It argues that the world oil price influences aggregate demand and supply of these countries. Thus, in contrast to other studies, a SVAR model is used to identify structural shocks by including the oil price. The aggregate supply and demand shocks are then analyzed. The correlations of supply shocks among the member countries are either negative or low positive. Similarly, the correlations of demand shocks, except few pairs of countries, are also negative and low positive. Thus, shocks are not synchronized. These results are different than the results found in other similar studies probably due to the model specification. The implication of the findings is that the GCC countries would find it difficult to adjust supply and demand shocks if they form their aspired Gulf Monetary Union.

Reverse hysteresis? Persistent effects of autonomous demand expansions

2020 ◽  
Vol 44 (4) ◽  
pp. 835-869 ◽  
Author(s):  
Daniele Girardi ◽  
Walter Paternesi Meloni ◽  
Antonella Stirati
Keyword(s):  
Fixed Effects ◽  
Inflation Rate ◽  
Aggregate Demand ◽  
Participation Rate ◽  
Fixed Effects Model ◽  
Demand Shocks ◽  
Short Run ◽  
Demand Fluctuations ◽  
The Impact ◽  
Local Projections

Abstract Empirical works documenting highly persistent effects of negative demand shocks (‘hysteresis’) have questioned the prevailing wisdom that potential output is exogenous to aggregate demand fluctuations. We assess whether the effects of positive demand shocks also tend to persist beyond the short run. We estimate the impact of 126 aggregate demand expansions in OECD countries between 1960 and 2015 through local projections, using a dynamic two-way fixed-effects model and a propensity score-based specification. We find that demand expansions exert positive persistent effects on GDP, participation rate and capital stock. Effects on the unemployment rate and productivity are also strong and quite persistent, but evidence regarding their permanence is mixed. The effect on the inflation rate is positive but small and imprecisely estimated, and there is no sign of accelerating inflation. Our results bear relevant implications for existing models of hysteresis and for theories of demand-led growth.

scholarly journals A Theory of Demand Shocks

2009 ◽  
Vol 99 (5) ◽  
pp. 2050-2084 ◽  
Author(s):  
Guido Lorenzoni
Keyword(s):  
Business Cycles ◽  
Aggregate Demand ◽  
Aggregate Productivity ◽  
Productivity Shocks ◽  
Demand Shocks ◽  
The Public ◽  
Long Run ◽  
Short Run ◽  
Public Signal ◽  
Heterogeneous Productivity

This paper presents a model of business cycles driven by shocks to consumer expectations regarding aggregate productivity. Agents are hit by heterogeneous productivity shocks, they observe their own productivity and a noisy public signal regarding aggregate productivity. The public signal gives rise to “noise shocks,” which have the features of aggregate demand shocks: they increase output, employment, and inflation in the short run and have no effects in the long run. Numerical examples suggest that the model can generate sizable amounts of noise-driven volatility. (JEL D83, D84, E21, E23, E32)

scholarly journals Demand, Supply, and Markup Fluctuations

2021 ◽  
Author(s):  
Carlos D Santos ◽  
Luís F Costa ◽  
Paulo B Brito
Keyword(s):  
Structural Model ◽  
Supply And Demand ◽  
Aggregate Demand ◽  
Cost Curve ◽  
Firm Level ◽  
Demand Shocks ◽  
Marginal Costs ◽  
Price Adjustments ◽  
Marginal Cost Curve ◽  
Pass Through

Abstract Markup cyclicality has been central for debating policy effectiveness and understanding business-cycle fluctuations. However, measuring the cyclicality of markups is as important as understanding the microeconomic mechanisms underlying that cyclicality. The latter requires measurement of firm-level markups and separating supply from demand shocks. We construct a novel dataset with detailed (multi-)product-level prices for individual firms. By estimating a structural model of supply and demand, we evaluate how companies adjust prices and marginal costs as a response to shocks. We find that price markups respond positively to supply shocks and negatively to demand shocks. The mechanism explaining the observed markup behaviour is the same for both shocks: incomplete pass-through of changes along the marginal-cost curve to price adjustments. These observed price and output responses are consistent with dynamic demand considerations. Finally, we use our estimated shocks to show how aggregate markup fluctuations in the sample period are mostly explained by aggregate demand shocks.

scholarly journals Are uncertainty shocks aggregate demand shocks?

2018 ◽  
Vol 167 ◽  
pp. 142-146 ◽  
Author(s):  
Stefano Fasani ◽  
Lorenza Rossi
Keyword(s):  
Aggregate Demand ◽  
Demand Shocks ◽  
Uncertainty Shocks
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