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AS-AD Curves: An Analysis Using the BQ and OLS Methods

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  • Wan, Cihang
  • Ji, Yangyang
  • Luo, Youliang
  • Zhang, Tianyu

Abstract

The demand and supply shocks in the U.S. and China are analyzed using the Blanchard and Quah (BQ) and ordinary least squares (OLS) methods. For the U.S. data, the aggregate supply (AS) curve has a positive slope, whereas the aggregate demand (AD) curve has a negative slope. However, the two methods yield inverse results when data from China are analyzed. In the BQ method, the AS curve slope is negative and AD curve slope is positive, indicating a “slope puzzle.” In the OLS method, no “slope puzzle” is present.

Suggested Citation

  • Wan, Cihang & Ji, Yangyang & Luo, Youliang & Zhang, Tianyu, 2022. "AS-AD Curves: An Analysis Using the BQ and OLS Methods," MPRA Paper 113437, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:113437
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    slope puzzle; BQ method; OLS;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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