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The dynamic effects of aggregate demand and supply disturbances

Blanchard, OJ and Quah, Danny (1989) The dynamic effects of aggregate demand and supply disturbances. American Economic Review, 79 (4). pp. 655-673. ISSN 0002-8282

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Abstract

We interpret fluctuations in GNP and unemployment as due to two types of disturbances: disturbances that have a permanent effect on output and disturbances that do not. We interpret the first as supply disturbances, the second as demand disturbances. Demand disturbances have a hump-shaped mirror-image effect on output and unemployment. The effect of supply disturbances on output increases steadily over time, peaking after two years and reaching a plateau after five years.

Item Type: Article
Official URL: http://www.aeaweb.org/aer/index.php
Additional Information: © 1989 American Economic Association
Library of Congress subject classification: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Journal of Economic Literature Classification System: C - Mathematical and Quantitative Methods > C3 - Econometric Methods: Multiple; Simultaneous Equation Models; Multiple Variables; Endogenous Regressors
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles
Sets: Departments > Economics
Research centres and groups > LSE IDEAS
Collections > Economists Online
Research centres and groups > Centre for the Study of Human Rights
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 27 Apr 2007
URL: http://eprints.lse.ac.uk/1572/

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