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Does Asymmetry of International Shocks Matter for the U.S. Business Cycle?

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  • Edward N. Gamber
  • Juann H. Hung

Abstract

This article proposes and investigates the asymmetry hypothesis, which predicts that an international asymmetric shock tends to have a stronger and longer effect on the U.S. business cycle than a symmetric shock. The hypothesis finds empirical support in the impulse responses of U.S. output and inflation to symmetric and asymmetric shocks; those responses are estimated in a four-variable structural vector autoregression. The hypothesis also finds support in stylized facts: The longest U.S. expansions have tended to occur when the rest of the world was growing below potential. (JEL E3, E5, E4) Copyright 2004, Oxford University Press.

Suggested Citation

  • Edward N. Gamber & Juann H. Hung, 2004. "Does Asymmetry of International Shocks Matter for the U.S. Business Cycle?," Economic Inquiry, Western Economic Association International, vol. 42(4), pages 647-666, October.
  • Handle: RePEc:oup:ecinqu:v:42:y:2004:i:4:p:647-666
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    File URL: http://hdl.handle.net/10.1093/ei/cbh087
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    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates

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