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Ultimate Sources of Aggregate Variability


  • Robert J. Shiller


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.

Suggested Citation

  • Robert J. Shiller, 1987. "Ultimate Sources of Aggregate Variability," NBER Working Papers 2129, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:2129
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    References listed on IDEAS

    1. Ray C. Fair & Robert J. Shiller, 1987. "Econometric Modeling as Information Aggregation," Cowles Foundation Discussion Papers 833R, Cowles Foundation for Research in Economics, Yale University, revised Jan 1988.
    2. Peter M. Garber & Robert G. King, 1983. "Deep Structral Excavation? A Critique of Euler Equation Methods," NBER Technical Working Papers 0031, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Ray C. Fair, 1986. "Sources of Output and Price Variability in a Macroeconometric Model," NBER Working Papers 2112, National Bureau of Economic Research, Inc.
    2. repec:oup:cambje:v:41:y:2017:i:4:p:1197-1212. is not listed on IDEAS
    3. Rizwan Tahir, 1994. "Estimating the Quantitative Importance of Various Sources of Macroeconomic Variability," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 33(4), pages 1073-1087.

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