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Social and Behavioral Sciences Commons™
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Full-Text Articles in Social and Behavioral Sciences
The Stabilization Of The U.S. Economy: Evidence From The Stock Market, Matthew D. Shapiro
The Stabilization Of The U.S. Economy: Evidence From The Stock Market, Matthew D. Shapiro
Cowles Foundation Discussion Papers
Until recently, economists widely believed that economic activity had become less variable in the United States following the end of World War II. Challenging this belief, new research suggests that key historical time series are spuriously volatile, a finding that is highly controversial. Data from the stock market may provide a vehicle for resolving the controversy. Economic theory relates stock prices to real activity; empirical tests also show a strong link between stock prices and activity. Financial data are accurately measured over long spans of time and hence are free of most of the measurement problems in other time series. …
Sources Of Business Cycle Fluctuations, Matthew D. Shapiro, Mark W. Watson
Sources Of Business Cycle Fluctuations, Matthew D. Shapiro, Mark W. Watson
Cowles Foundation Discussion Papers
What shocks account for the business cycle frequency and long run movements of output and prices? This paper addresses this question using the identifying assumption that only supply shocks, such as shocks to technology, oil prices, and labor supply affect output in the long run. Real and monetary aggregate demand shocks can affect output, but only in the short run. This assumption sufficiently restricts the reduced form of key macroeconomic variables to allow estimation of the shocks and their effect on output and price at all frequencies. Aggregate demand shocks account for about twenty to thirty percent of output fluctuations …