Working Paper: NBER ID: w2129
Authors: Robert J. Shiller
Abstract: What, ultimately, is different from quarter to quarter or year to year that accounts for the fact that macroeconomic variables change over these intervals? That is, which are the biggest ultimate sources, in terms we may say of tastes, technology, endowments, government policy, industrial organization, labor-management relations, speculative behavior, or the like, that change to cause this variability? There are a bewildering variety of claims in the literature for such ultimate sources. Far fewer efforts have been made to give a breakdown of the variance of macroeconomic aggregates by source. The two notable such breakdowns to date are by Bigou (1929) and Fair (1987). The nature of the evidence for such breakdowns is discussed here, and the possibility that a partial breakdown may be well-determined is put forward. An unsuccessful attempt is made to detect a component of macroeconomic fluctuations that is due to the weather.
Keywords: macroeconomic variability; aggregate fluctuations; ultimate sources
JEL Codes: E32; E37
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| psychological factors (D91) | aggregate fluctuations (E10) |
| government policy (F68) | aggregate fluctuations (E10) |
| technology shocks (D89) | aggregate fluctuations (E10) |
| taste shocks (D11) | aggregate fluctuations (E10) |
| psychological factors (D91) | investment decisions (G11) |
| variations in government expenditure (H50) | output variability (C67) |
| stochastic simulation model (C69) | short-term forecasting of real GNP (F37) |
| aggregate fluctuations (E10) | output variability (C67) |