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Asymmetric Effects Of Aggregate Demand Shocks Across U.S. Industries: Evidence And Implications

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  • Magda Kandil

    () (International Monetary Fund)

Abstract

Both time-series and cross-sectional regressions are estimated for 28 private two-digit standard industrial classification (S.I.C.) industries in the United States. Positive and negative aggregate demand shocks have varying effects on each of real output growth, nominal wage inflation, and price inflation for many industries. Asymmetry appears to be the result of movements in demand along a kinked-slope industrial supply curve. Supply-side asymmetry appears to be induced by trend price inflation. In addition, the variability of industrial demand increases asymmetry in the effects of aggregate demand shocks on industrial variables.

Suggested Citation

  • Magda Kandil, 2006. "Asymmetric Effects Of Aggregate Demand Shocks Across U.S. Industries: Evidence And Implications," Eastern Economic Journal, Eastern Economic Association, vol. 32(2), pages 259-283, Spring.
  • Handle: RePEc:eej:eeconj:v:32:y:2006:i:2:p:259-283
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume32/V32N2P259_283.pdf
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    References listed on IDEAS

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    Cited by:

    1. Ahrens, Steffen & Pirschel, Inske & Snower, Dennis J., 2017. "A theory of price adjustment under loss aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 78-95.
    2. Ahrens, Steffen & Pirschel, Inske & Snower, Dennis J., 2014. "A theory of wage adjustment under loss aversion," Kiel Working Papers 1977, Kiel Institute for the World Economy (IfW).

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