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On the relative importance of demand and supply shocks: a panel VAR study for US states

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  • Edward M. Feasel
  • Padmapriya Gollapudi
  • Daiki Kumazawa

Abstract

This article is a panel VAR study of demand and supply shocks in the USA using state-level data where structural shocks are decomposed into state idiosyncratic and common components. Decomposition suggests that in all instances, idiosyncratic state shocks rather than common shocks have larger impact and explain most variation in both the state-level unemployment rate and real gross state product. Further, demand shocks are the primary driving force in unemployment rate fluctuations, while both demand and supply are important in output movements to varying degree of impact and importance depending on the use of quarterly or annual data.

Suggested Citation

  • Edward M. Feasel & Padmapriya Gollapudi & Daiki Kumazawa, 2017. "On the relative importance of demand and supply shocks: a panel VAR study for US states," Applied Economics Letters, Taylor & Francis Journals, vol. 24(18), pages 1340-1345, October.
    • Handle: RePEc:taf:apeclt:v:24:y:2017:i:18:p:1340-1345
    DOI: 10.1080/13504851.2016.1276266
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    Cited by:

    1. Ngomba Bodi, Francis Ghislain, 2018. "Contributions relatives des chocs de demande agrégée et d’offre agrégée aux fluctuations de la croissance réelle en zone CEMAC [Relative contributions of aggregate demand and supply shocks to busin," MPRA Paper 116376, University Library of Munich, Germany.

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