Working Paper: NBER ID: w2146
Authors: Matthew D. Shapiro
Abstract: Supply shocks played an important role in macroeconomic fluctuations during the 1970's. Supply shocks are also increasingly important in Keynesian and neo-classical models of the business cycle. This paper is a short survey of these theoretical models. It also discusses the history of supply shocks in recent business cycles.
Keywords: supply shocks; macroeconomic fluctuations; Keynesian models; neoclassical models; business cycles
JEL Codes: E32; E52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| supply shocks (E39) | aggregate output (E10) |
| supply shocks (E39) | aggregate supply (E23) |
| aggregate supply (E23) | price level (E30) |
| supply shocks (E39) | price level (E30) |
| adverse supply shocks (E00) | negative correlation between prices and output (E31) |
| declines in productivity and increases in crude material prices (L79) | aggregate supply (E23) |
| supply shocks (E39) | breakdown of Keynesian models (E12) |