Supply shocks, demand shocks, and labor market fluctuations
By: by Helge Braun, Reinout De Bock, and Riccardo DiCecio.
Contributors: De Bock, Reinout.; DiCecio, Riccardo.
Series: Working paper -- 2007-015A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2007-015A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2007
Place of publication: [St. Louis, Mo.]
Language: eng
Format: Electronic resource
Description: "We use structural vector autoregressions to analyze the responses of worker flows, job flows, vacancies, and hours to shocks.  We identify demand and supply shocks by restricting the short-run responses of output and the price level.  On the demand side we disentangle a monetary and non-monetary shock by restricting the response of the interest rate.  The responses of labor market variables are similar across shocks: expansionary shocks increase job creation, the hiring rate, vacancies, and hours.  They decrease job destruction and the separation rate.  Supply shocks have more persistent effects than demand shocks.  Demand and supply shocks are equally important in driving business cycle fluctuations of labor market variables.  Our findings for demand shocks are robust to alternative identification schemes involving the response of labor productivity at different horizons and an alternative specification of the VAR.  However, supply shocks identified by restricting productivity generate a higher fraction of responses inconsistent with standard search and matching models"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 4/16/2007.

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