THE IMPORTANCE OF SECTORAL AND AGGREGATE SHOCKS IN BUSINESS CYCLES

The theoretical literature on business cycles proposes numerous causes for their occurrence. This paper attempts to measure the relative importance of aggregate, whether real or nominal, and sectoral factors in generating real economic fluctuations, as well as to identify economic variables that are...

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Bibliographic Details
Published in:Economic inquiry 1991-04, Vol.29 (2), p.317-335
Main Authors: Norrbin, Stefan C., Schlagenhauf, Don E.
Format: Article
Language:English
Subjects:
Business cycles
Economic aspects
Industrial productivity
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Summary:The theoretical literature on business cycles proposes numerous causes for their occurrence. This paper attempts to measure the relative importance of aggregate, whether real or nominal, and sectoral factors in generating real economic fluctuations, as well as to identify economic variables that are correlated with the various factors. Empirical results indicate that both aggregate and industry‐level factors are statistically significant in explaining variations in output with the aggregate factor being the most important. Some evidence is presented that links the aggregate factor with monetary variables.
ISSN:0095-2583
1465-7295
DOI:10.1111/j.1465-7295.1991.tb01274.x