Supply Shocks, Demand Shocks, and Labor Market Fluctuations

The authors use structural vector autoregressions to analyze the responses of worker flows, job flows, vacancies, and hours to demand and supply shocks. They identify these shocks by restricting the short-run responses of output and the price level. On the demand side, they disentangle a monetary and nonmonetary shock by restricting the response of the interest rate.
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Fed in Print: An index of the economic research conducted by the Fed.